Why is the USA the only advanced nation that licences for-
profit, primary health insurance companies? (Primary
excludes companies that offer only extended health
coverage to clients who wish to be insured against costs not
covered by their primary insurer. Except for a deductible
amount, these for-profit companies must pay claims validated
by the primary insurer. Some nations have privately-owned
primary health insurance companies, but they are managed as
The answer is simple: American exceptionalism. Americans
are exceptionally naïve, suckers for an obvious scam.
The other nations will not license a for-profit company
because it has an inherent conflict of interest that leads
inevitably to corruption: the for-profit insurance company
can increase its profit merely by denying a valid claim. If
it can be done, it will be done; only those with below-
average intelligence would believe otherwise.
The other nations also believe that it is immoral to earn a
profit by denying succor to the sick. It contradicts the
teachings of all of the major religions. America is
exceptional in that so many of its most fervent faithful
have their most profound faith in the profit motive. They
worship Mammon, the free market deity, and actually boast
that they are not their brother’s keepers.
Aside from questions of conflict of interest and morality,
there is a practical reason to avoid a for-profit system:
healing sick people is not a service in the same sense that
repairing a car is a service. The auto-repair industry
serves its customers profitably in a free market for several
reasons that do not apply to the health care industry:
1. The cost of an auto repair rarely exceeds 50% of the
cost of acquiring an equivalent vehicle and is usually
less than 5% of that cost.
The cost of an illness may exceed the combined cost of
buying a home and raising a family of university
graduates. And you cannot acquire an equivalent body!
2. Garages stay in business only by attracting customers
with good service at a moderate price.
Health care providers stay in business only by
conforming to industry standards and statutes. The
health care industry (as opposed to the health care
insurance industry) does not want customers. The
doctor regrets that the patient needs his help.
3. Drivers influence the market by choosing the best
Patients cannot influence the health care market
because 80% of all health care is consumed by 20% of
the patients and these are generally too sick to worry
about price or quality of service. Effectively, their
doctors make the decisions. The other 80% hardly have
any choices to make after they have chosen an
insurance company. And the insurance companies offer
very similar products. Market-driven healthcare is an
4. Auto repair is based upon commodities: widely
available parts, repair manuals, tools, and mechanics.
Costs are well known and prices are regulated by
Health care is based upon technological innovation.
Doctors are mostly specialists, often researchers and
professors with a few students. They sometimes build
their own equipment. The customer’s life may depend
upon finding the right doctor. If that doctor does not
have a contract with the patient’s insurance company,
the patient will not get that doctor.
5. Garages profit by offering good service at a moderate
price to all customers.
For-profit insurance companies profit by cherry-
picking the healthiest customers and by charging
higher premiums and offering less coverage to the
other customers. The poorest customers, with no
insurance, avoid doctors until they are really sick
and need expensive treatment, usually at an emergency
room at public expense. And even middle class families,
with minimum insurance coverage at a high price, too
often face bankruptcy.
6. A driver who can’t pay the repair bill will stop driving.
If too many drivers stop driving, some garages may fail.
It’s tough on the losers, but the nation survives.
If a patient can’t pay the hospital or doctor bill, the
taxpayer pays for it, directly or indirectly: nobody is
turned away from the emergency room. In particular,
children and students cannot afford to pay for their own
care. But they must receive the finest possible health
care (and education) regardless of the wealth or poverty
of their parents. Parents (and other family members),
guardians, teachers, day-care and play-ground attendants,
and all other adults that serve children and students,
directly or indirectly, must also be healed regardless
It takes a village to raise a child and it takes an
entire nation to raise a thriving generation. This
requirement is enshrined in our Constitution’s Preamble,
which obliges us to … promote the general Welfare and to
secure the Blessing of Liberty to ourselves and to our
Posterity. Posterity is our nation’s only
product. We must do it right.
For the above reasons, health care (unlike automobile care)
must be universal and insurance premiums must be subsidized
for those unable to pay. As always, deductible claims will
be paid from an insurance pool. For statistical and
administrative reasons, the larger the pool, the lower will
be the premiums. Because everybody is in the same pool,
single-payer systems like Medicare are the least expensive.
This is a mathematical certainty.
Single-payer can also be a single private nation-wide
consumer co-operative or mutual insurance company operating
under federal guidelines. Since the Medicare system is
already functioning, it would seem to offer the easiest
The alternative to one single-payer pool is hundreds of
different for-profit insurance pools that add important
administrative costs: financing, advertising, customer
selection, claims denial, high executive salaries, and
profits. These additional costs exceed 20% of the total
current healthcare costs and are over four times the
single-payer administrative costs. These are unnecessary
costs paid to for-profit insurance companies by their
customers with no corresponding benefit. Only conservative
Americans vote to be scammed and then protest vehemently
when liberals try to help them.
Opponents of single-payer counter that Medicare
administrative costs are higher per patient than the
corresponding for-profit costs. This is probably true but
irrelevant. Administrative costs are not incurred per
patient but rather per visit. They won’t show you those
figures because older people visit their providers much more
often than younger people. Caveat emptor!
And the health outcomes of our for-profit system are
inferior to the systems of other advanced nations whose per
capita costs are much less than ours.
The opponents also claim that universal healthcare costs
will be contained only by rationing the care: denying care
to the sick. But, without exception, every for-profit
health insurance company has a large building with an entire
floor or two devoted to a department that does nothing else
but ration health care. These claim deniers are answerable
only to their highly paid management, not to Congress or to
State Legislatures or to voters. The only recourse to
denial of a claim is a law suit. Good luck with that,
especially after we get tort reform.
They also claim that universal health care will increase the
national deficit. Actually, well-managed universal health
care will reduce the deficit. We already pay for the
uninsured and have by far the highest per capita health care
cost on Earth due to our for-profit system.
Their corollary objection to single-payer is based upon so-
called government inefficiency. It is true that Medicare
and Medicaid have serious problems, but this is mostly
because Congress has never allowed a panel of doctors to
administer the system. Such legislation has now been passed
The major advance in the new law is the IPAB (Independent
Payment Advisory Board), consisting of 15 members from all
areas of the health care industry. It has broad powers
to set rules and procedures for payment to providers.
Its decisions cannot be overturned without a majority vote
of Congress and signature of the President. It is no wonder
that conservatives are trying to repeal the law.
Actually, many branches of government are very efficient
(although their mission may be poorly conceived or even a
total waste): federal civil service employees that serve
Cabinet secretaries, NASA, the military, naval, and air
forces. Public employees serve our community police and
fire departments, libraries, schools, water supply and waste
disposal, highway and bridge maintenance – our entire
infrastructure. The DMVs watch over 200 million drivers.
The Postal Service loses money because it subsidizes
industry’s junk mail and because it must serve Podunk at the
same price that it serves Gotham.
The Veterans Administration provides excellent care to
millions of veterans suffering a wide range of problems at a
low cost compared to private industry. (See the Rand
survey ). The managers are accountable to
the public; when poor conditions were found at Walter Reed
Hospital, a general was fired. Also, see this
report, which finds the VHA outperforming private US
hospitals in every sense.
But too often, we are much like the USSR, which beat us into
space but couldn’t make toilet paper. This happens when
government is run by ideologues who don’t believe that
government should serve the public. That is why you get
Brownie doin’ a heckuva job.
The fact is that, given public support, government can do
everything effectively and efficiently. Those who oppose
single-payer by parroting the inefficient government
mantra can see the culprit in any mirror.
If France can do it better for less, why can’t we?
The current US law that goes into effect in 2014 is flawed,
but much better than the status quo for all citizens.
Generally, it is poorly understood. In fact, it is not that
complicated. As NY Times columnist, David Leonhardt,
First, people will be required to buy insurance,
to spread costs among the sick and the healthy.
Second, insurers will be prohibited from
cherry-picking only the healthiest customers,
again to spread costs. Finally, the government
will give subsidies to people, like McDonald’s
workers, who can’t afford insurance on their own.
Germany, the Netherlands and Switzerland all use
a system along these lines to cover everyone,
largely through the private sector, for less
money per person than this country spends.
The current health care law will eventually have to be
changed so that our domestic industry will no longer be
burdened by costs that its foreign competitors don’t face.
The easiest way to achieve that is to:
1. Immediately, bring the healthiest age group, children
and youth through university, into Medicare, which has
administrative costs that are one-tenth that of private
insurance and which grow more slowly than that of private
insurance. Much of this group is already a tax burden.
2. Year by year, as feasible, raise the eligibility age
for youth and lower the eligibility age for the elderly
until health care is universal.
Thanks for your interest.
Marvin Sussman, retired engineer
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