Two years out of college and gainfully employed in the marketing department of an investment banking firm, I was transferred to the Philadelphia office from Chicago only to find out six months later that plans had suddenly changed. The company cut us all severance checks and said “Thanks for coming out here, but we’re headed a different direction.”
I moved back to Chicago to live with a friend and subsisted on severance money, licked my unemployment wounds and tried to figure out what to do next.
The severance lasted that whole summer while I busied myself representing a running shoe store on the road racing circuit. I took a job at the shop selling shoes and tried to balance the need for food with a perceived need for training time and freedom. But significantly, I had no health insurance. Pretty dumb.
Looking back, that was a pretty naïve way to approach life. I could easily have gotten sick running all those miles. I did experience bad colds and the flu, but fortunately did not get something like testicular cancer or any number of the debilitating illnesses that strike people every day.
10 years later I left a steady job to run my own business. By then I had a small family and a wife to care for, so we purchased the COBRA insurance option while our business lurched toward profitability. Almost. One of our major clients hit hard times, so I went back into the workforce and into the protective arms of company-provided health insurance.
Over the years there would be one or two other periods of COBRA health insurance as we transitioned between companies. While COBRA is an expensive way to maintain insurance, we have always appreciated its availability, along with unemployment benefits that have tided us (and millions of others) over through periods between jobs.
These government-run programs were set up to help everyday people manage life transitions. The COBRA health insurance and unemployment benefits programs were never designed as permanent solutions. They are tools to help people until their situation improves. As such, these programs are examples of responsible, compassionate government and provide a valuable service to millions of Americans. But our country now has begun to realize that the “situation” of American workers when it comes to purchasing health care has become a permanent problem that the free market has largely chosen to ignore.
For example, let’s go back to the point in time where I was setting up my business and wanted access to health care for my family. When individuals or small business owners seek health insurance they are in essence in competition with much larger corporations. The health insurance game is structured to serve large pools of people whose premiums or “employee contributions” (the term applied to health insurance payments taken out of employee paychecks) enables health care insurance providers to aggregate cash resources. That collective cash accumulation in turn allows the health care company to use the accumulated capital to earn compounding interest–and profits– against risk of having to make payments and outlays to cover medical care expenses when people do get sick and make claims against their health care insurance policies.
As corporations themselves, Insurance companies have an obligation to deliver profit to owners and shareholders. That means both the insurance companies and the corporations they serve are competing to maintain profits. Passalong costs escalate as a result. But rather than negotiate the actual costs with the health care providers to manage this process effectively, the cost escalation triangulates between insurance companies, corporations and health care providers. Only HMOs have attempted to impinge on this process, but the result has been that health care costs have not really been reduced to the policyholders. Instead, care rationing entered the equation with patient referrals and primary care physicians playing the role of health care moderators. This can be a recipe for bad decision-making and many consumers learned to revile HMOs as standing between them and best-case health care decisions.
With everyone protecting their bottom line and no one holding the other accountable, health care services keep rising in perceived value. The problem America now faces is that this profit-driven health care system has begun to ignore its obligation to provide effective health care coverage to the policyholders. It also currently leaves millions of Americans outside the health care system umbrella. These two problems are what health care reform is seeking to address.
The so-called “public option” may be a vital tool in fixing the American health care system by serving as a means to get costs under control and provide readily available health care to all U.S. citizens. The public option can introduce health care insurance that is reliable, stable and clear in its coverage policies. The question is whether the public option be implemented without causing the collapse of our current system of health care insurance providers with trying to compete with a potentially more affordable public program.
Currently the health care insurance game is essentially corrupted by false values assigned to many types of health care. For example, a chemotherapy treatment can be billed out at $45,000, but an HMO might negotiate to pay only $25,000 for that treatment. But if an individual consumer without insurance who needs chemotherapy approaches the hospital to receive treatment, the fixed cost of that treatment has been established at $45,000. That $40,000 gap is the playground for the health care industry and insurers to take outrageous profits out of the system.
A public option would help in establishing known, reasonable values for the costs of health care. Just as government regulators work to protect the health and legality of financial markets, health care must be regulated in order to provide fair, equitable prices for health care. The free market has shown little interest this task, so government is being forced to step in and play that role. Currently the profits delivered to health care insurance companies are simply too great a temptation for the insurance industry to self-regulate. Instead they are lobbying politicians heavily to prevent health care reform. So we see where their priorities lie.
But as we’ve seen from the recent economic crash, our country can no longer afford to wait for the free market to correct itself on certain key elements of economic equity. Even corporations have begun to shrivel under pressure to maintain such costly health care insurance plans against spiraling costs for employees. Companies cannot afford to create more jobs or hire more people because the cost of insurance for those employees is a deterrent. If companies can’t be profitable because they can’t afford to buy insurance and keep a healthy, active workforce in place, the whole economy suffers.
But the sadder component of the health care reform debate is that the cost of health insurance is killing initiative among America’s potential new business owners and entrepreneurs, who can’t afford to take the risk of staring their own company due to costs of health insurance. And think about the artist, musician, plumber or electrician who simply wants to ply their trade in the American economy but cannot afford to take a risk with inferior, more expensive health insurance? The public option would give them an alternative.
The public option will no doubt have a moderating effect on the profitability of some insurance companies. Some that are based on extremely high profit margins may even go out of business. But the public option is not a government takeover of health care insurance. As one caller on a radio talk show host put it, we have public universities and private universities, both of which serve a vital need. But neither puts the other out of business–as some conservatives claim will happen if a public health insurance option is actuated.
A public option for health insurance is a positive moral and economic choice for America. It is not socialism to provide affordable health care options to Americans who want to start their own business or work for themselves. Instead it can be a vital tool for engendering economic stimulus as people gain confidence to strike out on their own knowing they can afford to protect their own health.
A public option for health insurance is the American thing to do.