Thursday, August 27, 2009

Health Insurers: Are they really that greedy?

It is in vogue to berate and ridicule the ‘greedy’ insurance companies as the debate rages about health care reform. Democrats in Congress, led by Henry Waxman, have asked the nation’s principal health insurers to provide details on executive pay, spending on entertainment, and other financial records—however it appears that they are not that adamant about receiving data on the earnings of these companies. President Obama has vilified insurers as being the parties responsible for bankrupting families and making care unattainable for millions.

They say a picture is worth a thousand words: Perhaps the graphs shown here will reveal that it may not be the insurer's 'insatiable greed' that is responsible for the escalating costs of health care.

Return on Assets is a measure of a company's profitability, equal to a fiscal year's earnings divided by its total assets, expressed as a percentage. This comparative graphic reveals that the health insurer’s return is modest-perhaps even miniscule—compared to other sectors of the economy. In fact, the health care insurers rank below all of the other sectors depicted. (Note the relative ratios of the pharmaceutical and medical equipment companies)

Return on Equity is a measure of how well a company used reinvested earnings to generate additional earnings. Once again the graph illustrates that the health care industry has lower returns when compared to other sectors of the economy.

Net Profit Margin is a ratio of profitability calculated as net income divided by revenues, or net profits divided by sales. It measures how much out of every dollar of sales a company actually keeps in earnings. This statistic is usually used when comparing companies within the same sector but when being used to compare different sectors other considerations such as the ratios illustrated above should also be considered.

These ratios certainly suggest that the health care industry is not making the grotesque profits some politicians would have you believe. While the fringe of the conservative camp makes preposterous claims about death panels, euthanasia and the impending arrival of National Socialism, the liberal faction are just as culpable with their hyperbole and unjustified witch hunting: One side uses fear mongering while the other side uses vilification. Fortunately the truth is revealed by resolute individuals who have the patience and fortitude to allow the loony contingent on both sides to be heard. As is typically the case, the truth is usually expressed by those who exercise the virtues of tolerance, integrity and courage.

Saturday, August 22, 2009

Healthcare: America's Moral Dilemma

In the previous blog, a case was made for the encouragement and acceptance of open and free debate concerning issues of social importance in a liberal society. The crucial outcome of expressing diverse opinions is the realization of truth. In addition to finding truth, open deliberation is instrumental in attaining a consensus or common ground amongst opposing factions. This seems to be the case in the progressively more raucous health care debate. It would appear that parties on both sides of the debate seem to agree that healthcare is a moral imperative.
Former Senator Rick Santorum stated in an interview with Greta Van Susteren that the health care issue is in fact a “moral obligation” but he also stressed that the provision of healthcare to the uninsured should not be undertaken by the government. Conservative political pundit Larry Elder also acknowledged that health care was a “moral imperative” but “not a constitutional right”. These statements which were both aired on Fox News were in response to President Obama’s recently convened conference call, on which he spoke to thousands of faith leaders about health care as a moral and ethical issue.
So it seems that there may be a vestige of common ground between what can be best described as combatants in this impassioned and vitally important American debate.
But the question remains as to how this moral obligation to provide health care to the uninsured members of the community—to be your brother’s keeper--should be best delivered.
The conservative camp contends that this ‘obligation’ is best accomplished by means of the free market economic system that is currently in place. The Obama bloc suggests that it is the responsibility of the government to make healthcare available to those who are not currently able to access affordable healthcare.
If the concept of a moral imperative is taken to mean a duty or responsibility, moreover, a social responsibility, then the arena of the private sector may be the wrong place in which to expect a solution to providing healthcare to those who cannot afford it. The champion of neoliberal economics Milton Friedman states that the doctrine of social responsibility is a "fundamentally subversive doctrine in a free society, and … that in such a society, there is one and only one social responsibility of business–to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud." It is difficult to reconcile how the current for profit health care paradigm, operated by corporations, would be able to justify providing healthcare to citizens who cannot afford health insurance or are disqualified from acquiring insurance. It seems perplexing and paradoxical that the Christian right, who by definition embrace the concept of benevolence, condone the status quo.

Moral imperatives are often difficult to resolve in the culture of egoistic individualism that is the fundamental nature of America’s perception of liberty. Citizens are identified as autonomous, self-interested—their motivation derived from concern for their own welfare and that of their immediate family. In this view, it is extremely difficult to justify the government imposing itself, via a government operated healthcare plan, on its citizens, who value their liberty and independence with such verve. Increased taxation accompanied with the economic inefficiencies inherent in demonstrably inept government bureaucracies will not be tolerated by the public unless they are willing to abandon the liberal individualism that places such important value of the pursuit of private interest and autonomy. Unless there has been a paradigm shift in the political ideology of the American electorate, the ‘public option’ seems to be unpalatable. The incongruity here is that Obama received 52.9% of the popular vote. Was the electorate misled by Obama’s campaign rhetoric or is the population prepared to accept a move to the political centre?

Where does this leave the debate? It seems clear that the current corporate based economic paradigm is ideologically incapable of providing for those in need of healthcare since any form of benevolence is deemed to be a form of intrusive tax, ergo, an uninvited diminution of shareholders return on investment. The role of the government to supply healthcare to those in need seems to be antithetical to the American ethos—whose constituents value the notion of individual autonomy and the unfettered pursuit of self interest. If the current economic institution of corporate based capitalism and the political institution that adheres to the political philosophy of liberal individualism are incapable of providing for the downtrodden and marginalized members of society, is there another social institution that can make healthcare available to this segment of society.

David Hume stated that “no qualities are more entitled to the general good-will and approbation of mankind than benevolence and humanity, friendship and gratitude, natural affection and public spirit, or whatever proceeds from a tender sympathy with others, and a generous concern for our kind and species.” His close friend and iconic proponent of free market economics Adam Smith generally agrees:
How selfish soever man may be supposed, there are evidently some principles in his nature, which interest him in the fortune of others, and render their happiness necessary to him, though he derives nothing from it except the pleasure of seeing it. Of this kind is pity or compassion, the emotion which we feel for the misery of others, when we either see it, or are made to conceive it in a very lively manner. That we often derive sorrow from the sorrow of others, is a matter of fact too obvious to require any instances to prove it; for this sentiment, like all the other original passions of human nature, is by no means confined to the virtuous and humane, though they perhaps may feel it with the most exquisite sensibility. The greatest ruffian, the most hardened violator of the laws of society, is not altogether without it.

Clearly it can be argued that even the most hardened individual can have empathy for his fellow man. The often cited Kaiser ABC poll on healthcare suggests that Americans are willing to help their fellow countrymen but when asked if they would you be willing to pay more—either in higher health insurance premiums or higher taxes—in order to increase the number of Americans who have health insurance, 54% to 41% were opposed. So as it stands, Americans do exhibit compassion to those in need but are not willing to part with their income or assets to accomplish this benevolent gesture. Is there another social institution that can fill this gaping requirement?

Perhaps the answer lies in non-profit organizations such as the various religious institutions and charitable foundations that have demonstrated a proclivity to offer healthcare to those in need. Unlike investor-owned organizations, which are economically driven, nonprofit health care organizations are obligated to meet society’s needs for medical education and research and to advocate for and meet the needs of the most vulnerable members of their communities. Health care, like education, is a "public good" or "social service", essential to human dignity and the pursuit of happiness. The Alliance for Advancing Non-profit Health Care cites three important aspects of healthcare:
• A healthy society rests on the health of its citizens.• Health care needs differ locally and are best prioritized and addressedwithin the political, social and economic fabric of each community.• Government cannot and should not try to meet all of society’s needs,and "running things" is generally best left to the private sector.

Perhaps it is time that the economic and political institutions of American relinquish their grip on healthcare and allow regional non-profit organizations—funded through the compassion of America’s affluent citizens and institutions— to be given the opportunity to provide a service that preserves human dignity and advances the well-being of the nation. This would entail insurance companies to surrender at least part of their franchise on a very profitable aspect of their business model. Corporate healthcare PACS would not likely allow this to be undertaken without hostile resistance. Government mandarins, intent on adding to their legislative power and influence would similarly vehemently oppose relinquishing their grasp on power. America’s healthcare system is headed towards a catastrophe: if something inventive and revolutionary is not undertaken soon, the nation will find itself in a crisis that will test the resolve of every one of its citizens and institutions. Perhaps the time has come for the American people to consider Aristotle's notion of the Golden Mean and strike a balance between the pursuit of self interest, which is protected by the Constitution, and, the virtue of benevolence which is an integral attribute of an individual's conscience. This balance may, in the long term, ensure the sustainability of the community that facilitates the liberty and pursuit of happiness that is so heartily treasured. Fulfilling one's moral imperative may be requisite in guaranteeing the liberty accorded to them in their constitution.

Tuesday, August 18, 2009

The Value of Mendacity

The American healthcare debate is becoming increasingly bitter as diverse opinions emanate from all corners of the nation—if not the world. The oft-irrational harangues of the likes of Glenn Beck—who incidentally represents an exemplification of why America should have universal mental healthcare—and the fallacious statements of Sarah Palin with her ‘death panel’ fear mongering have certainly enlivened the debate if not desecrated it to a degree. However, proclamations from the peripheries of the political spectrum should be accommodated because these statements, although at times distasteful and counterfactual, demonstrate that the right of free speech is vital to the functionality of democracy.

It is a fundamental tenet of a deliberative democracy that free and open discussion, even those based on exaggeration and misrepresentation of facts, are acknowledged because they are vitally instrumental in ascertaining ‘the truth’. The outrageous and seemingly preposterous statements being made in the debate on healthcare—by both parties—serve an important purpose: It stimulates further debate and through this process the truth will inevitably become apparent. John Stuart Mill sums this condition up concisely.

In politics, again, it is almost a commonplace, that a party of order or stability, and a party of progress or reform, are both necessary elements of a healthy state of political life; until the one or the other shall have so enlarged its mental grasp as to be a party equally of order and of progress, knowing and distinguishing what is fit to be preserved from what ought to be swept away. Each of these modes of thinking derives its utility from the deficiencies of the other; but it is in a great measure the opposition of the other that keeps each within the limits of reason and sanity. Unless opinions favorable to democracy and to aristocracy, to property and to equality, to co-operation and to competition, to luxury and to abstinence, to sociality and individuality, to liberty and discipline, and all the other standing antagonisms of practical life, are expressed with equal freedom, and enforced and defended with equal talent and energy, there is no chance of both elements obtaining their due; one scale is sure to go up, and the other down. Truth, in the great practical concerns of life, is so much a question of the reconciling and combining of opposites, that very few have minds sufficiently capacious and impartial to make the adjustment with an approach to correctness, and it has to be made by the rough process of a struggle between combatants fighting under hostile banners. On any of the great open questions just enumerated, if either of the two opinions has a better claim than the other, not merely to be tolerated, but to be encouraged and countenanced, it is the one which happens at the particular time and place to be in a minority. That is the opinion which, for the time being, represents the neglected interests, the side of human well-being which is in danger of obtaining less than its share. I am aware that there is not, in this country, any intolerance of differences of opinion on most of these topics. They are adduced to show, by admitted and multiplied examples, the universality of the fact, that only through diversity of opinion is there, in the existing state of human intellect, a chance of fair play to all sides of the truth. When there are persons to be found, who form an exception to the apparent unanimity of the world on any subject, even if the world is in the right, it is always probable that dissentients have something worth hearing to say for themselves, and that truth would lose something by their silence. ON LIBERTY: CHAPTER II: OF THE LIBERTY OF THOUGHT AND DISCUSSION
Although followers of the debate—which there are too few of—may find some actions and statements repugnant, it is important to remind oneself that through the dissemination of seemingly preposterous statements the truth of the matter will be elucidated so that in the end an informed and hopefully just resolution will be ascertained.