Anyone who has ever tried to buy health insurance in the open marketplace knows how difficult and expensive it can be. I spent years working at jobs that did not provide health insurance, and I remember the annual feeling of dread when I received notice of the new premium increase. The only way I could keep the cost affordable was by continually raising the deductible until eventually, I was paying the highest premium I could afford, and paying all my medical bills as well, because, being blessed with good health, I never met the deductible.
This was years before the Affordable Care Act, so I can say that I have seen how health insurance functions in a free market. Now Republicans have taken steps to repeal Obamacare, but so far, there’s nothing in sight to replace it. They seem to believe that the free market will provide affordable, effective insurance for all who want it. My experience suggests otherwise.
The problem with health insurance is that it is not like other kinds of insurance, and, therefore, does not work well in a free market.
How does health insurance differ from other kinds of insurance? Insurance is a financial product that allows a group of similarly situated people to share the risks of various hazards to which they might be exposed. Among the first insurance policies were those created to protect the property of merchants and owners of ships. Such people regularly ran the risk of large losses if a ship sank. Insurance policies enabled a ship owner or merchant to join with others who ran similar risks to minimize the possibility of loss.
Property insurance, to be sustainable, had to meet certain conditions. First, the consumers of such insurance were, by definition, people who owned property. If a person owned property, then it could be reasonably assumed that he or she had sufficient wealth to insure the property. Insurance policies allowed such people to pool their wealth to protect themselves against the possibility of loss.
Insurance also depended on reasonably small chances of loss. If the majority of ships sank, insurance would have been impossible, because the losses would have exceeded the coverage. Since the majority of ships made it safely to port, they provided the necessary wealth to cover the few that did not.
A third condition for insurance was limited loss. All property has a certain value, and the cost of insurance was limited by that value. One needed only buy enough insurance to cover the value of the property. If the owner had enough wealth to cover the loss, he or she didn’t need to buy insurance at all.
These three conditions — the existence of wealth, the small chance of losing it, and limited loss — are needed for sustainable insurance. The problem with health insurance is that it does not meet any of these conditions. Instead of property, health insurance covers the cost of maintaining the intangible state known as “health.” Health is the physical and mental state of the body that enables one to acquire and enjoy property, but neither health nor the body are property. While it can be assumed that those who have property have enough wealth to buy insurance, the fact that one has a body does not mean that one has enough wealth to insure that body. Embodiment is a condition of human personhood, conferred freely on everyone. A poor person might never own an expensive house or car, but he or she is embodied, and thus endowed with a physical, mental, and spiritual entity that is beyond all price.
Health insurance, except for catastrophic policies, does not cover only the occasional or rare loss. A homeowner may go for decades without making an insurance claim because most houses will not be destroyed by wind or fire. But everyone needs health care, and eventually, everyone will make a claim. The insurance company can survive under such conditions only by steadily increasing premiums and deductibles, and “cherry picking” only the healthiest customers. Prior to the Affordable Care Act, this is exactly what the health care marketplace did.
Health insurance also fails to meet the third condition of insurance, because the losses it attempts to cover are not limited. Everyone inhabits a body that is subject to illness and injury with the potential for losses far beyond one’s ability to pay. Only the truly wealthy, and here we are talking about the billionaires, can afford to self-insure.
Since health insurance does not meet the conditions for sustainable insurance, perhaps, we should think of it less as an insurance product and more as a cooperative effort to protect ourselves from a risk to which everyone is liable. Such an effort must necessarily include everyone — old and young, healthy and sick, rich and poor — in order to create a large enough pool to make the losses sustainable. Those who objected to Obamacare’s individual mandate were understandably opposed to being required by the government to buy a product. But if health insurance is thought of as a shared risk rather than a product, then they should not object to participating in the common risk pool that provides the funds for the health care that everyone will eventually need. Requiring people to fulfill their responsibility is simply asking them to do their part to insure a just and healthy society for all.
Joseph Crisp is a hospital chaplain.
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