It's an oldie but a goodie. Read it here.
Here's a basic statement of one fundamental irrationality in our private health insurance system:
Can you see how these deep-seated structural problems with private insurance will be solved either by the current 'reform' bill, or by a 'public option'? Neither can I.[T]he only way modern medical care can be made available to anyone other than the very rich is through health insurance. Yet it's very difficult for the private sector to provide such insurance, because health insurance suffers from a particularly acute case of a well-known economic problem known as adverse selection. Here's how it works: imagine an insurer who offered policies to anyone, with the annual premium set to cover the average person's health care expenses, plus the administrative costs of running the insurance company. Who would sign up? The answer, unfortunately, is that the insurer's customers wouldn't be a representative sample of the population. Healthy people, with little reason to expect high medical bills, would probably shun policies priced to reflect the average person's health costs. On the other hand, unhealthy people would find the policies very attractive.
You can see where this is going. The insurance company would quickly find that because its clientele was tilted toward those with high medical costs, its actual costs per customer were much higher than those of the average member of the population. So it would have to raise premiums to cover those higher costs. However, this would disproportionately drive off its healthier customers, leaving it with an even less healthy customer base, requiring a further rise in premiums, and so on.
Insurance companies deal with these problems, to some extent, by carefully screening applicants to identify those with a high risk of needing expensive treatment, and either rejecting such applicants or charging them higher premiums. But such screening is itself expensive. Furthermore, it tends to screen out exactly those who most need insurance.
The often-repeated mantra on the "center left" that we need to sit down, crunch numbers, and try anything and everything that might "work" is disingenuous. All of this faux-pragmatist garbage from Obama is not only false, but patronizing. We don't need to sit around and listen to 'all the best ideas' and continue to be 'open minded'. We need to realize that the 'conversation' going on right now isn't a discussion among fair-minded participants all aiming at getting things right; the 'conversation' is merely a proxy for a political struggle between divergent interests (e.g. maintaining the economic power of some vs. realizing universalizable interests like securing universal coverage).
The "pragmatic" truth here is that it is obvious what a rational, just, efficient health care system would look like. Despite the complications introduced into the discussion by Obama and co., this is not a complicated issue whatsoever. The only complicated question here should be how to most effectively fight against powerful industry interests and free-market fundamentalism.
Here's a simple question that we are publicly barred from asking: what purpose should our health care institutions serve? In other words, what should be the raison d'etre of insurance as an institution?
