Paul Krugman tells us how everyone really should vote Democratic to save something he thinks should be saved. The problem with that thing, healthcare insurance for pre-existing conditions, is that it’s an oxymoron, like military intelligence or politicians telling the truth. They are two diametrically opposed concepts being mashed together into the same phrase to leave us with mush meaning nothing (or at the very least revealing some very confused logic). To make matters worse, Gov. Jerry Brown, D-Calif., is pondering whether to make health insurance plans which don’t cover pre-existing conditions illegal.
If we’re ever to be able to make any sense of this subject, it’s vital that we grasp the basics. Yes, I know, I bang on about this. There’s a difference between paying for healthcare and healthcare insurance. The importance of this is when we start talking about pre-existing conditions. If that’s what we’re talking about, then we’re not discussing insurance. For that insurance is, by definition, a method of pooling the risks of future unlikely, but ruinous if they occur, events. Something that has already happened is not unlikely, or even low probability — it has happened and has a probability in the here and now of one. This is not possible to insure against, because it’s happened.
[Also read: Susan Collins doesn’t believe GOP pre-existing conditions bill goes far enough]
Thus all plans and thoughts and schemes which tell us that we can pay an insurance premium to cover the healthcare costs of such a pre-extant disease are simply wrong. We cannot. We can indeed work out some method of paying those healthcare costs, of course we can. It could be taxation, it could be everyone else paying into the pot to cover the bills, it could be straight out-of-pocket payments, but it cannot, by definition, be insurance. If we all acknowledged that, we could then start to design a rational healthcare financing system, rather than the appalling kludge which is Obamacare or the oft less-appealing alternatives currently on offer.
Insurance is, by that definition, about uncertain events in the future. We can pool that risk and each pay a premium to cover them, that’s not a problem. But if there’s no uncertainty, then that’s simply not something we can do.
Perhaps it’s right to tax everyone so that the sick gain treatment. I don’t say it is, but that’s one solution to this problem. That’s actually what Obamacare does do, insist that everyone buy “insurance” and many are paying too much in premiums for their coverage in order to subsidize others. But by doing it this way, rather than just with that straight taxation, we’re making the system very much more expensive than it should be.
That greater expense being why we shouldn’t be confusing the issue, covering it up, by calling it all insurance, the one thing it is not. We’d also solve most of the problems of the basic cost of healthcare by dropping the pretense. We shouldn’t be cycling the costs of treatment for those pre-existing conditions through the insurance companies in the first place.
Insurance is useful and has a valid place in the system. But we’ve got to differentiate between that risk sharing of low probability future events and the payment for healthcare costs already extant. Without doing that, by repeatedly jamming together opposed concepts into the oxymoron of insurance for pre-existing conditions, we’re never going to understand the problem we’re trying to solve. For that’s a problem of how to pay for healthcare, not how to insure those expenses.
Tim Worstall (@worstall) is a contributor to the Washington Examiner’s Beltway Confidential blog. He is a senior fellow at the Adam Smith Institute. You can read all his pieces at The Continental Telegraph.
