I received a call earlier this week from a freelance reporter who writes for a health care blog, and we had a long conversation about the ills of medical insurance in America.

One thing I emphasized to her is the fallacy of conservatives repeatedly claiming that “the U.S. health care system is the best in the world!”

Yes, the care that is provided here is quite good. Expensive but good. Very good, but really expensive.

By now, anyone who’s been paying attention (or paying insurance premiums) knows that health care costs in the United States are out of control.






Costs keep going up and up and up—and yet our results, overall, are comparatively mediocre.






It should be obvious and beyond dispute that something needs to change. And we can put that argument into terms that not only are morally compelling but also make good sound business sense.


Three reasons why the U.S. system of employer-provided, for-profit health insurance should be replaced with something better:


1. It places American companies at a competitive disadvantage.

In virtually every other major industrialized nation, the cost of providing medical insurance to individuals is borne by the state rather than by employers.

What this means is that U.S.-based companies, faced with paying for most if not all of their employees’ health insurance premiums (which includes both active and retired employees) are at a severe disadvantage. They are on an uneven playing field when it comes to competing for market share with companies from other nations.

It is a testament to American business that our trade deficits are not worse than they already are. If that burden of covering employees health care costs were to be removed, it could provide a huge boost to the U.S. economy and potentially make a big difference in reducing unemployment.

2. It forces insurance companies to make no-win ethical choices.

By its very nature, any for-profit business will try to maximize its bottom line. Nothing wrong with that. A company’s first responsibility is to its owners and/or shareholders. That’s how capitalism works, and in most cases, for most kinds of business, it works just fine.

If a company doesn’t focus effectively on making a profit, it will go out of business. The profit motive is generally a positive aspect of a capitalist society. It makes companies compete, work harder, try to please their customers, and excel at what they do. So far, so good.

But when it comes to medical insurance, that goal of maintaining and increasing profits—an ethical responsibility that every company owes to its stakeholders—can run smack up against other ethical priorities related to the well-being of the company’s customers, its insured.

To make more money, an insurance company may need to reduce costs. That might require dropping customers who are costing too much—taking too much out of the system—in favor of those who are healthier and don’t need the benefits. It could mean deliberately denying service for people who are in need. Sometimes it results in misleading if not outright dishonest practices: misinformation, obfuscation, delay, complexity; anything to slow down payouts and cut down on claims.

I’m not justifying such tactics on the part of insurance companies, but I also think it’s not fair to blame them entirely for doing what for-profit entities have to do. Here in the United States, we have put those businesses into the untenable position of making decisions about ethical matters that are in conflict with one another. Either way, they can’t win.

3. It causes the greatest harm to the weakest among us (and ends up costing more in the long run).

The whole theory behind medical insurance (or, indeed, insurance of any kind) is to reduce costs by sharing risks. By spreading out the burden of paying for insurance roughly equally over everyone, we can guarantee—we can insure—that no single individual is met with catastrophic costs in the event of a major misfortune. This works fine, as long as everyone contributes and everyone is covered.

In our present system, however, many people aren’t covered and some people don’t contribute.

The way it works now, those who face the least risk—the healthiest and the richest—are the ones most desired for coverage by for-profit insurance companies. That just makes sense: healthy, successful people can afford to pay higher premiums and, at the same time, are less likely to require large payouts. They are the ideal customers for profit-based insurance enterprises.

And what that also means, of course, is that those who can least afford good insurance and those who are most likely to require significant coverage—the poorest and the least healthy—are the last people that for-profit insurance companies want to take on as customers. They get weeded out and end up either uninsured or, at best, inadequately insured.

All of which leads to the poor and the unemployed in America making excessive use of public hospital emergency rooms for all their medical needs. And this, unfortunately, is both the most expensive and the least effective form of health coverage that we could provide for them. But it is what our present system has driven them to.

The poor and the weak get sicker, and taxpayers end up paying far more than we should to help get them well again. It’s not right, ethically, and it’s also quite foolish economically.

The point of this article is not to offer or promote any specific solution, although I will say it seems clear to me that some sort of single-payer plan, e.g., expansion of Medicare, makes the most sense in the long run. But what I want to convey today is that our current way of doing things here in the United States is not only morally dubious, but also downright bad business. We can do better, and we should.