In Sickness and in Health: Health Insurance in America

In Sickness and in Health: Health Insurance in America

A curious and revealing symmetry has developed between Republican and Democratic approaches to the issue of private health insurance. In the 2004 election campaign, John Kerry proposed that the federal government clamp a lid on premiums by relieving insurers of most of the expense for catastrophic claims—those that exceed thirty to fifty thousand dollars annually for any given individual. Democrats, in other words, identified themselves with the idea that those who are richest—those who contribute proportionately more to the federal treasury via the progressive tax base—should heavily defray the medical expenses of those who are sickest. For their part, George W. Bush and the Republicans have for some time pointed to the tendency for hospitals and health maintenance organizations (HMOs) to take money saved from premiums paid by their healthier clients—that is, patients who don’t need much medical care—and use it to subsidize the expenses of the poor. This propensity, Republicans like to say, functions more effectively as a safety net than anything government could do.

When it comes to private insurance, apparently, Democrats would have the rich subsidize the sick; Republicans seem largely content to have the healthy subsidize the poor. In their complementary if half-satisfactory ways, these two doctrines are extremely suggestive. The traditional purpose of private health insurance has always been to take premiums paid by the healthy and redistribute them to the sick. The time-honored principle underlying America’s public income-security programs has always been to take money from the rich and redistribute it to the poor. What the two parties’ proposals together suggest is that private health insurance should be nudged toward some kind of middle ground between these two functions. But they also raise a question: Why not go all the way? Why not abandon altogether the notion of health insurance as privately managed redistribution from healthy to sick and make it become a form of publicly managed income security, a form of redistribution from rich to poor?

Indeed, thanks to new developments in medical technology, we are on the brink of an era in which the traditional sine qua non of private health insurance, redistribution from healthy to sick, will make less and less sense. Not only might a public system have to take over anyway, but it would have to look less like a public version of private insurance, redistributing funds from healthy to sick as in Germany, France, and Belgium, and more like a public income-security scheme redistributing funds from rich to poor.

To consider what this possibility means, let us recall that the income-security components of the welfare state, those dealing with richer-poorer redistribution, typically fall into two categories. On the one hand, there are “social insurance” programs, such as social security or unemployment insurance, which, as the French writer Pierre Rosanval...