Deconstructing the health insurance problem. What is the root cause of a disconnect between what is needed and what is provided? What does this tell us about solutions that have been suggested?
We know that privatized health insurance is a profit-driven business. The leaders of these businesses are tasked with the job of maximizing profits. This creates dividends and high stock values for their investors. So, there is automatically drive to figure out ways to take in more money in premiums than are paid out in services: denial of payment, copays, micromanagement of health providers, and so on. Like the banks and credit card companies, the more insurance companies can squeeze out of their clients, the more the chief officers are going to get in bonuses.
But, if the investors were socially responsible, wouldn't they force the insurers to treat their clients better? Who are these stockholders? The biggest investor class is the mutual funds. That is, the folks who clump together all of your 401(k) "savings." The fund managers' jons are to maximize the return on the money invested. So, they have no interest in forcing the insurance companies to do anything more than - maximize profits. A further disconnect from the needs of the "insured."
So, if you are socially responsible, why can't you force your fund manager to act more responsibly? Actually, you can. You can invest in the social responsibility funds - ones that pay attention more to the mission statements of the business than the bottom line. Can you guess how many insurance agencies are funded by these mutuals? I would guess none. So, a further disconnect.
In fact, if your 401(k) is investing in a portfolio that includes an insurance company, you are betting that they are going to focus on nothing more than maximizing the growth of your stock. If you, in turn, have health insurance policy with that same insurer, you are absolutely betting against yourself. You want them to charge you more in premiums than you will get paid out in services. So, you may be totally disconnected from your own welfare.
Peter Senge described a similar problem in his book The Fifth Discipline a few years ago. His conclusion was that the only way to bridge disconnected decision branches in a feedback system is to connect all the decision makers by the same communication medium. In plain language, the insurance CEO, the fund manager, the individual investor, the health care provider, and the patient all have to talk together at roughly the same time. MSNBC, Fox News, CNN, Congress, and the White House aren't going to do this (we can deconstruct the reasons for that elsewhere). So, does that make the problem unsolvable?
I think not. However, we are still a few steps away from the enabling technology. So, bear with me for a science fiction scenario - social media and its successor. I do not know where social media will end up. If I did, I would be a whole lot richer than I am. However, a common carrier that can attract all of the players to join in and listen to one-another can work much better than the talking-pointed heads on tv or the speech makers in Congress.
We have witnessed the failure of our government agencies to lead us to a workable solution for health care. Maybe an electronic democracy can make those idiots obsolete.