Wednesday, September 02, 2009


In 1972 there was a made-for-television spoof of B Grade Westerns called “Evil Roy Slade.” John Astin played the most dangerous outlaw in the West. In the film, Slade falls in love with woman named Betsy Potter who decides to reform him.

“You don’t have to be Evil Roy Slade,” she tells him. “You can change.” After thinking it over, Slade tells her she’s right. “I could become Evil John Ferguson, Evil Fred Noland or Evil Lee Rich.”

I’m reminded of that fictional conversation every time I hear certain people discuss the role of health insurance companies as they relate to healthcare in the United States. It’s as if most people have been so brainwashed they can’t imagine a system in which the health insurance industry doesn’t make all the rules – while we are expected be grateful they will take our money.

The industry decides who will be insured, what the insurance will cover and how long the people who are insured will remain insured. We have forgotten that health insurance evolved as a means of minimizing financial risk for the insured, while making a profit for the insurance companies – but not a guarantied percentage. That’s why it’s called risk.

The original concept was that people who bought insurance were betting that their healthcare would cost more than the annual premiums; insurance companies sold the insurance, betting that the combined premiums of all their clients would be more than what they would pay out. The concept requires risk for both parties.

Today in this country, the healthcare insurance industry has created a system under which they take almost no risk because they can pick and choose the young and healthy while excluding the sick and elderly and have convinced most of us that if we rock their boat healthcare will somehow vanish.

Our way or the highway is how it is presented to us. They call it free market, but it isn’t. In fact, preventing a free market is why the industry pays out so much money to keep lawmakers voting their way. Insurance industry apologists are putting up the same tired smoke screens to obscure the problem. Let’s examine them.

Untaxed medical accounts. It is a ludicrous concept. If people had the money to save, they would buy the insurance.

Tort reform. This is a joke because the percentage of money paid out by insurance companies in huge settlements is miniscule and the insurance industry knows it.

Insurance company competition across state lines. This would be laughable if some didn’t take it seriously. It wouldn’t change a thing because the insurance companies all use the same standards and the fix is in. Look at the “competition” now because that’s what it will look like if even if barriers are taken down.

What insurance companies know and fear is meaningful regulation; nationalized healthcare is the boogeyman they have raised to frighten us. The solution is simple and it can be real, competitive and done in a free market.

For it to work, though: all insurance companies have to take all applicants, including those with preexisting conditions, to spread the risk. And insurance companies cannot be allowed to cancel policies for reasons known only to them.

If you want real competition, regulation will give it to you. Without the deck stacked in their favor, individual companies will have to actually find ways to cut costs and sell more insurance than their competitors. It has worked in other countries and it will work here, if we can pull the fangs of the insurance dragon.

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