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An argument that medicinal insurance is non beneficial

Gossip, speculation, and scuttlebutt about politics. March 13 2007 6: Any successful attempt to reform health care in the United States must accommodate two realities. The problems inherent in the U. Open discussion of a "single-payer" system in which the government pays for and regulates health care is verboten within the political mainstream because it is presumed that Americans would never accept socialized medicine.

Whatever solution arrived at by Congress and the president in all likelihood, not this president will have to harness market forces because, it's widely believed, markets will always outperform the dead hand of government. The lesson of "Hillarycare," a sweeping proposed health-care reform that died in Congress and may have delivered the House and Senate to the Republicans in 1994, weighs heavily on Democrats' minds even though Hillarycare was not a socialized-medicine scheme but rather an attempt to reorder the private insurance market.

A short history of health care.

The trouble with the policy debate that's slowly beginning to emerge as the medical-industrial complex spins out of control is that it pays maximum deference to Reality 2 political reality and minimum deference to Reality 1 the thing itself. This is an occupational hazard for mainstream political thinkers, who tend to define a pragmatist as someone who can find common ground between Republicans and Democrats no matter how irrelevant the compromise may be to the problem it's meant to solve.

Thus in a recent column, Slate editor Jacob Weisberg noted with admiration that Sen. Wyden to read it at least three times. Cohn's book, to be published next month, is Sick: Each chapter of Cohn's book is devoted to one or two patient narratives that illuminate a particular dysfunction of the present medical system, and the chapters are arranged in such a way that the dysfunctions appear more or less in the order in which they first became significant national problems.

The result is an 80-year chronology of repeated market failure, with each successive reform serving at best as temporary respite from the previous problem. Read it and weep. Capitalism can't deliver decent health care. What we recognize as modern medicine, Cohn writes, began in the 1920s.

  • Assigning health care costs to sick people is what the market wants to do;
  • The overall trend—the gift of an increasingly market-driven health-care system—is to undermine the very idea that the cost of illness should be spread out among the general population, healthy and unhealthy alike.

That's when doctors and hospitals, having only during the previous decade learned enough about disease that they could be reliably helpful in treating sick people, began charging more than most individuals could easily pay.

To close this gap, which worsened with the advent of the Great Depression, the administrator of Baylor Hospital in Dallas created a system that caught on elsewhere and eventually evolved into Blue Cross.

The Blues were essentially nonprofit health insurers who served local community organizations like the Elks. In exchange for a tax break, Blue Cross organizations kept premiums reasonably low.

Instead, the government jumped on the bandwagon by exempting from the income tax company expenses associated with health care. President Bush's proposal to alter this subsidy so that tax treatment of the self-employed is the same as for people who work for large companies—who currently enjoy an advantage—deserves praise for its progressivity.

It would probably accelerate the business world's withdrawal from health insurance, which is inevitable. Like Bush's plan to overthrow Saddam, it's great on the front end and disastrous on the back end.

The Blues, in their early days, charged everyone the same premium, regardless of age, sex, or pre-existing conditions. This was partly because the Blues were quasi-philanthropic organizations, Cohn explains, and partly because the Blues were created by hospitals and therefore interested mainly in signing up potential hospital patients.

Jonathan Cohn shows how we got here.

They were sufficiently benevolent that when Harry Truman proposed a national health-care scheme, opponents were able to defeat it by arguing that the nonprofit sector had the problem well in hand. To survive, the Blues followed suit; today, they no longer enjoy a tax advantage and are virtually indistinguishable from other health insurers.

Meanwhile, large companies, which tend to employ significantly more young people than old people, began to self-insure. The combined result was that people who really needed health care had an increasingly difficult time affording, or even getting, health-care insurance. As health-insurance costs rose during the 1970s and 1980s—driven both by improving medical technology and by the growing inefficiencies of the health-care system—health maintenance organizations, which had been around since the beginning, began to proliferate, along with other managed-care schemes.

  • But they've made a complete hash of the health-care system;
  • The Blues, in their early days, charged everyone the same premium, regardless of age, sex, or pre-existing conditions;
  • Instead, the government jumped on the bandwagon by exempting from the income tax company expenses associated with health care;
  • To survive, the Blues followed suit; today, they no longer enjoy a tax advantage and are virtually indistinguishable from other health insurers.

Like the Blues, HMOs became victims of their own success. Initially they were mainly nonprofit, but once again businesses spotted an opportunity and for-profit HMOs displaced nonprofit HMOs. According to Cohn, 12 percent of the market was served by for-profits in 1981; by 1997, that was more like 65 percent.

Managed care kept cost increases in check for a while during the 1990s, but eventually costs started creeping up again, creating the current crisis. Today employers are reducing or eliminating outright health-care benefits for employees; hospitals are consolidating and becoming less accommodating to low-income patients as they seek to push back against insurers; and a shrinking portion of the population has any health insurance at all.

The Bush administration has encouraged the growth of health savings accounts, which in the guise of providing greater consumer choice create a confusing array of alternatives that disguise a further reduction in coverage and more cost-shifting away from the young and healthy toward the old and sick.

The overall trend—the gift of an increasingly market-driven health-care system—is to undermine the very idea that the cost of illness should be spread out among the general population, healthy and unhealthy alike. In this sense, the private health-care market is too efficient.

Assigning health care costs to sick people is what the market wants to do. Markets can do many wonderful things, which is why I'm glad to live in a capitalist country.

  • The Blues were essentially nonprofit health insurers who served local community organizations like the Elks;
  • To close this gap, which worsened with the advent of the Great Depression, the administrator of Baylor Hospital in Dallas created a system that caught on elsewhere and eventually evolved into Blue Cross;
  • In exchange for a tax break, Blue Cross organizations kept premiums reasonably low;
  • Instead, the government jumped on the bandwagon by exempting from the income tax company expenses associated with health care;
  • This was partly because the Blues were quasi-philanthropic organizations, Cohn explains, and partly because the Blues were created by hospitals and therefore interested mainly in signing up potential hospital patients;
  • Instead, the government jumped on the bandwagon by exempting from the income tax company expenses associated with health care.

But they've made a complete hash of the health-care system. Doesn't that reality deserve more than passing respect? From 2000—2011, he was a Slate senior writer.