A “Discovery” on Columbus Day: Healthcare Reform

It was almost 520 years ago that Christopher Columbus is credited with discovering the Americas. Little did he know that the land he discovered would go on to become “the land of opportunity.” We used to recall the date of his discovery by reciting a little rhyme, “In 1492, Columbus sailed the ocean blue,” however, as a kid, I inevitably would always mess that up, saying, “In 1493, Columbus sailed the deep blue sea.” It made more sense to me because that was how we really talked. However, as much as I would plead with my teachers, they weren’t going to be swayed by my logic.

And so it is with healthcare reform. Most people don’t understand health reform and with good reason. So many people see “common sense” issues that they don’t understand why there are so many different opinions. The sheer number of differing views that seemingly change daily is enough to make anyone’s, myself included, collective heads spin. Nowhere was this more apparent than when I recently attended a forum moderated by the always witty, if somewhat acerbic, Jon Ralston (a local TV personality). What I like about Jon is that he facilitates discussion by playing devil’s advocate, which inevitably has the potential to heap loads of animosity on you by people who don’t like what you’re saying. When he interviewed me on his show recently, you would think he hated insurance companies, but at this forum, you would swear he was in bed with them. Love him or hate him, he manages to keep the conversation lively and on track. More than that, he challenges his audience to think, not just react.

One of the biggest “reaction” points of this forum discussion (and in reform overall) is about the hazards of a public plan. After much discussion from a panel of experts, the audience was solicited to ask questions. Most of the questions were pertinent and showed that the audience was indeed listening. However, one of the last audience members, most emphatically stated that we need a public plan. Her reason? Because. Not “because studies show that…” or “because in my experience, your data is being misinterpreted”, etc. Just because. I don’t know about you, but I stopped using the word "because" with no supporting arguments as a response to questions way back when I was 12 or so.

To understand why, when the President says you can keep your existing plan with the public “option,” the laws of economics won’t allow a public plan and private industry to co-exist, I’ll explain. I promise to follow my "becauses" with facts.

One of the tenets of our “land of opportunity” is a concept called the free market system, which is governed by a concept called “supply and demand.” When a lot of people want something (demand), those that can supply that something reap the rewards from it.  However, rarely is it so black and white. In reality, companies and individuals have to invest resources (time and money) while competing against others for the opportunity to meet the demand. If one company can run more efficiently and produce the demanded product better or more affordably, then they would tend to come out on top of the competition. That is assuming that they all have to play by the same rules. Imagine if a company didn’t have to play by the same rules that every other company did. Now imagine if that company actually got to make it’s own rules that applied to them but not everyone else. That’s the problem with a government plan. The fact that it is non-profit isn’t the deal killer—50% of the insurance companies out there are non-profit. (That’s probably a big reason why there’s no real competition in states like Alabama or Florida, which are dominated by non-profits). However, even non-profit insurance companies are subject to reserve requirements (monies they can’t spend to back up claims), state mandates (laws in individual states that require certain coverages in that state-more coverage equals more cost) and premium taxes (taxes on, well, premiums). A government plan wouldn’t have to abide by any of those (and many more) rules.

If a plan is cheaper, people will only pay more if they need better benefits—i.e. have medical conditions. Which further stresses the insurance companies’ resources, which causes premiums to go up even more, eventually hitting a ceiling where either the insurance company or the insureds can no longer sustain themselves. So what if insurance companies go by the wayside ? Well, if you don’t care if your pacemaker is the size of a backpack, or if you feel one health plan will fit everyone’s needs, then there is no problem. However, we can pretty much guarantee that America won’t be the leader in Nobel prizes in medicine if there is no incentive (profit) to do so. But that’s a subject for another day.