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Current Affairs: Why Private Health Insurance Makes No Sense

November 24, 2020

Topics: Quote of the Day

By Nathan J. Robinson
Current Affairs, November 21, 2020

Everyone has health, everyone needs healthcare. It is in all of our interest to have as good of healthcare as possible, delivered as inexpensively as feasible. We should all want it to be easy to get the care we need, and for nobody to fret about money when they go to the doctor.

I want to explain as clearly and simply as possible, then, why having for-profit private health insurance companies is fundamentally irrational and harmful.

(The author describes, with diagrams, how money flows in health care now, and how it would eventually flow in a single payer Medicare for All system.)

We have made sure in this model that the pool of money collected from the people who need healthcare is the same as the pool used to buy healthcare, by routing these funds through a different kind of artificial legal construct called a government, which operates by different rules and has a mandate of securing the common good of all the little dot-people on the left rather than a particular subset of wealthy people. Even better, because there is only one government, instead of many insurance companies, the monopoly on health financing gives greater power to bargain with the providers for better rates. The government is essentially a “corporation” comprised of everybody that can exercise the collective will of the people on the left as determined through a democratic process.

From your perspective as one of the magenta dots, what you care about is not whether the flow of funds is called a “tax” or a “premium,” but what the size of the green arrow going from you to the healthcare financing institution is (i.e. how much you pay) and what the size of the arrow coming back from the providers is (i.e. what you get in return). If you get a better deal under the single-payer system, it doesn’t matter how much it raises your taxes, because that amount is more than canceled out by the savings you get through not paying premiums and copays anymore.

Under no sensible theory do we want private, for-profit institutions diverting money that should be spent keeping you well. (I should note, too, that government spending already constitutes a huge part of American healthcare. We are simply talking about eliminating the part of national healthcare spending that is not conducted in the public interest, by switching it from being routed through a badly-designed institution to being routed through a well-designed one.)

I have presented my explanation here in a very simple way, and you may think this is all a thunderingly obvious point that does not need little graphics with dots in order to grasp. But there are plenty of people in the country who either do not understand it or are lying about it. Consider Pete Buttigieg, one of the main Democratic candidates for president this year. Pete Buttigieg criticized a single-payer health plan on the grounds that it would raise taxes and cost trillions of dollars. As you can see, while Buttigieg’s criticisms sound real, they are actually irrelevant. We are talking about which type of institution our healthcare dollars should flow through. Should they be called “premiums” and skimmed by insurance companies with no institutional mandate to care about everyone, or should they be called “taxes” and routed through a democratic, collectively-owned institution that has a mandate to serve universal needs?

Try to think less about words like “taxes” and “trillions of dollars” and more about what is actually going on and what it means for you.

Let’s have some clarity and ask the questions that matter, the most important of which is: how does a for-profit health insurance industry make any rational sense at all? The answer to which is clear from thinking about the basics of how it works. It doesn’t make sense. It doesn’t.



By Don McCanne, M.D.

How often have you heard people say that we can’t afford the taxes to pay for single payer Medicare for All? Even President-elect Joe Biden said during the campaign, “How are you going to pay for it?”

Regular readers here understand the efficiencies of funding our entire health delivery system through equitable taxes, but it is sometimes difficult to explain that to individuals who are hung up on the concept that taxes are bad. Although the full article is somewhat long, it is very useful to explain to those willing to read it why paying for health care through the tax system is a vastly superior method to our current inefficient and inequitable method of financing health care.

The full article should be shared with those who still think that private insurance is a better way to fund health care when clearly public financing is the right way to go.

Stay informed! Visit www.pnhp.org/qotd to sign up for daily email updates.

About the Commentator, Don McCanne

Don McCanne is a retired family practitioner who dedicated the 2nd phase of his career to speaking and writing extensively on single payer and related issues. He served as Physicians for a National Health Program president in 2002 and 2003, then as Senior Health Policy Fellow. For two decades, Don wrote "Quote of the Day", a daily health policy update which inspired HJM.

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