Thursday, July 24, 2025



Health Care Reform: Keeping Our Eye on the Ball Part 2

At first blush, the most progressive and compassionate health care reform initiative is one that happens to be included in even the most conservative legislative proposals under consideration: insuring the uninsured. It may also be one of the only major reforms to survive the relentless campaign by the health insurance industry and its allies within the Democratic Party to sink the other major health care insurance reforms floated by progressives, ranging from ambitious dreams of a single-payer system of government health insurance to a more modest plan to establish a government health insurance option that would compete with—and presumably chasten—the private health insurance industry.

The prevailing view among pragmatic reformists is that the establishment of a system for insuring the uninsured signifies a crucial—if only incremental—step in the direction of progressive reform. Congress and the Obama administration may not revolutionize the entire health care system, but they will have come to the rescue of the most vulnerable and abject in our society.

On closer examination, however, the initiative to guarantee—and mandate—insurance for the uninsured is not really a step in the direction of progressive reform. Still less does it signal that progressives have won at least one small but crucial victory over the entrenched interests of the health care insurance industry. In Massachusetts—considered a model for the national plan under consideration—the campaign to insure the uninsured was actually spearheaded by the insurance industry itself.

There is no mystery why the industry favors insurance for the uninsured: any mandate that compels the uninsured to purchase private health insurance means millions of new customers and immeasurable dollars more in premiums. For private insurers, the “crisis” of the uninsured is not that they receive no health care, but that the uninsured actually do receive health care—in hospital clinics and emergency rooms across the country.

As the industry explains in its own literature, the care currently provided to the uninsured is paid for by federal government subsidies to states—and to a lesser extent, by charitable donations—in support of hospital clinics and emergency rooms. As far as insurers are concerned, the real problem with the current system is that they don’t get a dime of that money. The dollars flow from the federal government directly to hospitals and clinics, bypassing the entire health insurance industry. So what does it mean to insure the uninsured? In the current context, it means taking all that government aid that goes directly for care and sending it to the insurance industry. You can almost hear the insurers whispering to each other: “Ka-ching!”

For those keeping score: be sure to code mandatory and/or government-subsidized “insurance for the uninsured” as a victory, first and foremost, for the commercial health insurance industry.

So does a victory for the industry automatically imply a loss for the uninsured? No, not automatically. And it would be a mistake to defend the adequacy of the current system. Do the uninsured receive all the care they need in hospital clinics and emergency rooms? Not a chance. But a law that forces the uninsured to buy into the private insurance system will actually make matters worse. This probably helps explain why the only way to implement such a scheme is to make it mandatory.

Set aside the scandalous scenario that would see government subsidies for health care cut even as low-income citizens are forced to make expensive premium payments to private insurance companies. In truth, health insurers don’t particularly mind whether they are collecting money extracted from low-income policyholders under the terms of a coercive mandate or money extracted from the federal government through subsidies to such policyholders.

The real scandal is that the migration of the uninsured into the private health insurance system will, in all likelihood, dramatically diminish the quality of care. The reasons are hardly secret or obscure. In fact, the corporate and governmental defenders of insuring the uninsured regularly explain why care will suffer.

The insurance industry has consistently promised that, if allowed to take custody of those who currently go without insurance, it will more effectively contain, or even reduce, the overall social costs of caring for that population. Maybe they’re just blowing smoke, but odds are that there is something to that promise: once all the government money currently spent on hospital and clinic care for the uninsured becomes corporate revenue, industry leaders would be in violation of their fiduciary responsibility to shareholders if they didn’t do everything in their power to increase profits by controlling or reducing the amount of money spent on care.

Everyone who has health insurance understands how the commercial insurers minimize their costs: they deny claims. They refuse to authorize procedures and refuse to reimburse policyholders for medical expenses already incurred. Government advocates of insurance for the uninsured are counting on these same mechanisms to help reduce the fiscal burden of caring for those who currently receive care through government-subsidized hospital clinics and emergency rooms. They promise that, in the mid- to long-term, even a government-subsidized private health insurance mandate will be either cost neutral or cost effective for the government.

In other words, the insurance industry will generate greater profits for itself and fiscal relief for government. It appears to be a rare “win-win” situation. But what is the source of this bounty? Who loses in this new calculus? If you guessed the formerly uninsured, advance to the head of the class.

Comments

One response to “Health Care Reform: Keeping Our Eye on the Ball Part 2”

  1. Nicole Avatar
    Nicole

    You should read the book “One” by Lance Secretan – there is a reason for all and by eliminating the insurer could be the “tsunami” effect?

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