Conflating health care with health insurance

Having our cake and insuring it, too

Democracy,” wrote H.L. Mencken, “is the theory that the common people know what they want, and deserve to get it good and hard.” Nobody is better aware of this right now than House Speaker Paul Ryan, whose health-care reform plan was put into deep-freeze Friday.

The American Health Care Act — the measure he was hocking to House Republicans — could have been written by a focus group of middle-of-the-road vot-ers. It reduces Obamacare taxes. It eliminates the individual mandate. It sends more control of Medicaid back to the states. And, best of all, it retains regulations that require insurers not to charge more to sick people.

This is all popular, or at least politically defensible. And yet, people detested the bill. A recent survey by Quinnipiac University found that just 17 percent of U.S. voters approved of the AHCA.

If this sounds familiar to you, it should. Eight years ago, the components of Obamacare were popular, but people hated that bill, too. What is going on? The problem is that we the people of the United States demand to have our cake and eat it, too.

An overwhelming majority of Americans think health insurers should not be allowed to charge extra to people who are already sick. Fair enough. But that has the effect of jacking premiums up — if sick people cannot be charged more for care, healthy people have to subsidize them. That prices a lot of healthy people out of the market — why pay so much for a product you are not going to use? In response, Obamacare imposed an individual mandate and a raft of mandatory minimum benefits, which forced people to buy comprehensive insurance. People do not like that, so the House Republicans are proposing to repeal the mandate, which increases premiums, which people do not like, either.

The problem is that both parties, following the dictates of voters, are trying to expand the concept of “insurance” beyond any reasonable understanding of the term.

Imagine your house is on fire, and you don’t have insurance. As it burns to the ground, you call an insurer to buy coverage, but he refuses. Why? Insurance is based on the pooling of risk: Insurers make a bet your house won’t burn down; you make a bet that it will. This is a mutually beneficial arrangement so long as not too many houses catch on fire. You get peace of mind, and insurers make a profit by collecting more in premiums than they dole out in benefits.

Now, imagine the government requires the agent to cover you even though your house is burning, and not charge you any extra. That’s not really insurance anymore. It’s social welfare, mandated by the government and paid for by other policyholders — either through increasing premiums or imposing a stiff penalty for not signing up.

That is the problem with Obamacare and the GOP plan. Both require insurers to cover people with pre-existing conditions, without charging more. In so doing, they force healthy people to subsidize the sick.

So, what to do? Let’s stipulate that society has a moral duty to provide health care to people with pre-existing conditions. We then need to differentiate between health care and health insurance. Health care is what really matters; insurance is just a means to that end.

For most Americans, private insurance is the most efficient way to provide health care. But it is not for everybody. It makes better sense to set up a separate system for people with pre-existing conditions. That way, we can turn health insurance back into actual insurance, rather than a subsidy of the sick at the expense of the healthy.

Sensible as this is, Washington, D.C., will not actually do this until voters stop insisting that insurance cover everybody. As long as we the people keep making unreasonable demands, politicians will respond with ill-conceived health care solutions — like Obamacare and the AHCA.

Jay Cost, a senior writer for The Weekly Standard, lives in Butler County (JCost241@gmail.com and Twitter @JayCostTWS).