A reason to be sick with fear

Here's the tough news health insurance executives don't want to hear: Any genuine health care reform will have to eventually eliminate the profit-making health insurance industry.

There are some goods and services that should be universally accessible because they promote the common good. Take electricity, for example. In the early 1930s, there was little profit to be made from stringing electrical lines across long, isolated stretches of rural America, and for-profit utility companies didn't want to do it at an affordable rate.

So the federal government launched a rural electrification program, providing farmers low-cost electricity (even as private utilities complained they faced unfair competition from government). That technological upgrade not only enhanced the quality of life for rural Americans, but it also contributed to the economy as farmers purchased electric appliances.

Health insurance presents capitalists with a similar conundrum. The only way for insurers to make a profit is to deny coverage to the sick; prohibit payment for some medical services; or charge astronomical premiums. Those entrepreneurial forces have helped create the creaky machinery we euphemistically call a health care "system."

As any consumer who has battled with a health insurer over a bill well knows, the Byzantine bureaucracy that determines payment may make sensible decisions about protecting the insurer's quarterly profits, but those decisions don't necessarily protect the patient's health. Many insurers, for example, balk at paying for colonoscopies, the exam considered the gold standard for early detection of colon cancer. So a patient may decide to get a cheaper test that misses his cancerous polyps. A couple of years later, he's battling colon cancer.

Multiplied across thousands of middle-aged workers each year, that scenario extracts a steep economic price. The nation would be better off if patients were encouraged to get colonoscopies paid by a national plan.

As he attempts to reform health care, President Barack Obama has celebrated the seeming cooperation of industry leaders, who have agreed to participate in some of the reforms the president wants — including cost-cutting. That's certainly a step in the right direction, since the industry spent millions to kill President Bill Clinton's health care proposals in the early 1990s.

But industry execs came to the table because they want to preserve their profits. They understand how much the public mood has changed since 1993; substantial health care reform is coming — with or without them.

So what price is to be paid for their participation? Insurers are lobbying furiously to kill any proposal to create a public health insurance plan to compete with private insurance plans, claiming a public plan would be "too attractive" and lure too many of their customers. That's probably true. Though legislators propose to finance a public health insurance plan with premiums, not tax dollars, it would likely still be cheaper than private plans because it wouldn't need to make money for shareholders.

If the public plan gets up and running, it won't supplant private insurers — not yet, anyway; health insurance companies are deeply entwined in the nation's economy. But a couple of attractive public insurance options could shrink the private market over time, leaving private insurers to offer policies only for catastrophic illnesses. That's the business they ought to be in, anyway.