Living and dying with private insurance

By Neil Macdonald

I was in Edmonton a few months ago having lunch with Mel Hurtig, and the old nationalist warhorse had a question about America's health-care debate: "Why don't we have anyone down there defending Canada's system?"

On the face of it, I found the question a bit absurd. Most Americans don't care enough about Canada's system to even discuss it.

But Hurtig's question is one I've heard often in Canada and I have the feeling many Canadians believe the U.S. is actually considering a Canadian-style, government-managed health-care system. That is a fundamental misunderstanding of Americans and their spellbound reverence for the wisdom and efficiency of free-market forces, even when those forces threaten their financial and physical well-being.

Death of the public option

It is true that some Democrats once did envision what is called the "public option" — some limited form of government-provided insurance.

President Barack Obama himself was sympathetic to the idea. But on the greasy field of self-interest, the public option found no traction.

Affluent Americans see it, correctly, as an effort to transfer some of their wealth to people down the income scale.

Unionized Americans and employees of big corporations already have good health coverage through their employers. They're just fine, Jack, and they can't imagine any change benefiting them.

Ditto many older Americans who enjoy Medicare, a form of socialized medicine (although many people here have somehow gulled themselves into believing it's not).

America's indigent millions are also covered, to an extent, though Medicaid, and therefore disinclined to spare any concern for the tens of millions, most of them working poor, who can't afford to pay for insurance.

Down with socialism

But the people who really led the charge against anything remotely resembling Canadian health care, who unleashed the lobbyists and advertising millions and then sat back, smiling, as right-wing protesters yelled about socialism and communism, were the predators collectively known as the health insurance industry.

According to a recent study, the top five insurers here made $12.2 billion in profits in 2009, up $4.4 billion, or 56 per cent, from a year earlier. These companies pay their executives multi-million-dollar salaries and produce good returns for shareholders.

That, of course, is business.

But, stated most simply, here's how they do it: They squeeze as much from customers as possible in premiums; then do everything they can to avoid paying for care once it's needed.

Quite literally, the more their customers suffer untreated, the richer these companies become.

Exemptions rule

Health-insurer abuse is well documented here, but the abusers are exceptionally well protected from the laws that regulate ordinary businesses.

They're exempt from federal anti-trust laws, for example, and therefore free to collude.

They've also seen to it that in several states, it's against the law to purchase insurance in another state, which means their little oligopolies are unthreatened by any necessity to compete.

Their customers, like lobsters in a trap, either pay up or go uninsured altogether.

There it is: Health care's free market. Efficient, certainly. Fair? Only if you consider fleecing the sick to be in any way ethical.

These companies employ divisions of employees whose sole task is to come up with a reason to refuse a claim.

Sorry, we've discovered you once had acne, so we can't pay for your breast cancer treatment. True story.

Regrettably, we'll have to refuse your treatment for kidney failure. Turns out you failed to report some back pain you suffered 30 years ago. And so on.

Premiums on the rise

These companies donate handsomely to federal politicians. So the ferocity and effectiveness of their assault on the public option was hardly surprising.

Meanwhile, though, just in case Obama's Democrats actually manage to pass something that might cut into profits, these insurers have been milking their clients even more vigorously this year.

One big company, WellPoint, recently announced it's jacking up premiums 39 per cent in California. A health-care think tank found WellPoint is seeking double-digit increases in 11 states.

Research by a congressional committee showed that WellPoint's profits totaled $4.2 billion last year. It pays its CEO $10 million in salary and stock options, and blew $27 million on lavish corporate retreats, all the while resisting claims whenever possible.

But WellPoint and its fellow insurers needn't really worry much, from the look of things on Capitol Hill.

It's now an open question whether the Democrats will be able to pass any health-care reform at all in the months ahead, despite their promises. And if they do, life for the insurers will likely just get better.
Getting richer

True, any health-care reform here would likely forbid insurance companies from citing "pre-existing conditions" to abandon a sick client.

But nothing before either house of Congress right now would prevent these companies from charging those individuals, say, $40,000 or so in annual premiums, or setting a $10,000 deductible.

At the same time, the Democrats want to oblige all Americans to purchase health insurance, thereby driving millions of young, healthy new clients into the companies' welcoming arms.

Now, I am not trying here to impugn America's entire health-care system. My family doctor charges $140 a consultation, calls me at home in the evening and can always fit someone in quickly. Doctors here routinely give you their cellphone numbers.

Also, having lived under Canada's system for decades, I was not always a fan. Like most of my friends, I have stories of arrogant doctors and ridiculous wait times, which, the Canadian Medical Association says, haven't improved much.

But the worst Canadian stories I've heard don't come close to the horrors that happen here. Harvard Medical School, for example, says 45,000 Americans die annually from lack of health insurance, many of them, no doubt, cut loose by their insurers.

The thing about health care is that normal market rules don't apply. Supply and demand is corrupted by the fact that the people who control the supply can also control the demand.

Just about the entire developed world believes in at least some form of public health care. It is seen as common sense and collective survival.

And yet, for reasons buried deep in their national psyche, Americans prefer to keep enriching corporations that feed on their misery. In the name of free markets, they pay excessively for their drugs and treatment as their less fortunate neighbours sicken and die.

That, I guess, is the best answer I can give you, Mr. Hurtig.