Information Landmine

"The Americans keep telling us how successful their system is. Then they remind us not to stray too far from our hotel at night." - An un-named EU trade representative quoted during international trade talks in Denver, Colorado, 1997.

Wednesday, August 12, 2009

"What's wrong with profit?"

The "What's wrong with profit?" placard has been a favourite of the trolls at the US healthcare forums. This has always struck me as far too general a question for anyone except a committed Marxist to give an answer to. I mean, unless those protesters would feel perfectly happy waving their banners at the next rally to legalise prostitution, I think they'd have to concede that it all depends on the context.

Anyway, I realise they're not really in it for the debate, so mostly this is just an excuse to point to Mike Konczal's rather excellent piece on health insurance at Atlantic Business. If you're not reading Mike's stuff, do.

The assumption behind Mike's piece is that there's nothing wrong with profit so long as it's the result of a mutually beneficial transaction. His point is that health-insurance doesn't look a lot like this, because of rescission: the word Health Insurers use for not paying out insurance claims when customers look like they'll be claiming more than they'll ever pay in. As he points out, this doesn't need to happen a lot to be a problem, because not many people get seriously ill in the first place:

So any random individual will not lose his health insurance through a rescission claim. But if you are of the group that actually needs to file a claim it could be anywhere from 5% to 50% likely.

Notice this makes the whole idea of health insurance pretty pointless. If you could be sure that you'd never run up serious health-care expenses in your life, you wouldn't bother with insurance, because it'd be cheaper to just pay as you go. And it gets worse:

So if I was a shareholder or executive of an insurance company, and saw that we had very few sick people on our insurance, I'd be very mad. Why? Because one great way to make money is to keep them on the roster, collect their large premiums, and then deny them the care they need when the time comes. Very sick people are probably the easiest to kick off; letting them go before collecting their insurance is leaving money on the table.

And that, in a nut-shell, is what's wrong with profit in this context. The way to get the really big profits in health-insurance is to sucker in sick people, and then not pay them, and that's a point that applies to the folks holding placards at town-hall meetings as much as it does to anyone else.

Update: More of Mike's stuff can be found at the ever excellent Rortybomb.

Also, Wikipedia informs me that medical expenses are the chief cause of bankruptcy in the United States. The CBS article tells us that this is "crushing families and businesses", so maybe the Democrats could send their own folks out waving "What's wrong with profit?" placards. Just a thought.


Post a Comment

<< Home

Support the Open Rights Group Creative Commons License
This work is licensed under a Creative Commons Attribution-NoDerivs 2.5 License.