Millions of Americans were outraged to see videos of the cold-blooded murder of United Healthcare executive Brian Thompson in New York. Yet some are actually happy to watch an insurance executive be executed and are cheering for the alleged murderer. How can we explain such behavior in a civilized society?
John C. Goodman, healthcare economist writing for Forbes, tells us a post on X wishing that the killer would never be caught racked up 95,000 likes. United Healthcare’s own bereavement message online was cruelly mocked by 77,000 laughing responses. How can people react this way?
Before we analyze what’s wrong with the American system of health insurance, let’s consider what’s right. Despite a popular misconception, a KFF (Kaiser Family Foundation) survey finds that more than two-thirds of Americans rate their health insurance as “good’ or “excellent.” And that holds for all kinds of insurance: employer plans, (Obamacare) marketplace plans, Medicare and even Medicaid.
Even among people who say they are not in good health (and who, presumably, need medical care), a substantial majority give positive ratings to their health plans. The KFF survey’s other two descriptive options for health insurance are “fair” and “poor.” Yet only a tiny percent of the public gives their health insurance the bottom rank of “poor.” That includes only 5% of people with health problems.
Goodman tells us in general, people view health insurance as different from other types of insurance, and that perception is accurate. You can see evidence of that difference by merely looking at the advertisements that appear on television and in print. In a free market, all sellers of goods and services know that the key to making a sale is to convince potential customers you can meet their needs. In fact, meeting a buyer’s needs is usually a more important selling point than the price. Casualty insurers, for example, sell their products by emphasizing the risks of bad things happening and assuring potential customers that their insurance is ideal protection.
In a free market you make money by finding people who have problems and meeting their needs. In that sense, the casualty insurance market is just like any other market. By contrast, when is the last time you saw a health insurance ad that says you will be “in good hands” if you get cancer, or heart disease, or if you need a hip or knee replacement? I bet you haven’t.
There is a reason for that. Under federal law, health insurers are not allowed to make a profit by meeting the needs of people with medical problems. In fact, they are required to charge the same premium to otherwise similar enrollees—regardless of their medical problems.
Goodman tells us the brutal reality this creates: “With one exception described below, no insurer in our health care system wants a sick person. No employer. No commercial insurer in the marketplace. No Medicaid managed care plan. And no safety net institution. Every time someone with an expensive medical problem enters one of these plans, the organization loses money. If the patient leaves the plan (for whatever reason) the plan makes money. If the plan develops a reputation for being really good at handling serious medical problems, it will attract more sick people and incur more losses. Given the horrible economic incentives that government regulation has created, the surprise is not that some patients experience mistreatment. The surprise is how few there are.”
What can be done about this situation? Is there a better way?
(For more on this subject, tune in next time for Part II.)
