The allocation of health care raises several issues. Economic issues, for instance. Moral issues as well.
And, would you believe it, even constitutional issues are at play.
At least that’s what U.S. Rep. Steve Kagen, D-Wis., author of the “No Discrimination in Health Insurance Act,” suggests.
In making this claim, Mr. Kagen does not argue (thankfully) that the U.S. Constitution grants anyone the right to health care. It doesn’t. Rather, the issue — as the first-term congressman explains it — is that health insurance companies “discriminate” on the basis of a person’s health. They do this when deciding whether to insure a person or not and when choosing how large of a premium to charge.
This, Mr. Kagen says, doesn’t jibe with the spirit of the Constitution. “Our Constitution protects all citizens — even those who are ill — against discrimination, and it is time to establish this fundamental principle in health care,” Mr. Kagen said in a statement when introducing his legislation. He has repeated the constitutional theme ever since.
The connection here is silly. Presumably, the prohibition on discrimination the congressman refers to is the Equal Protection Clause of the 14th Amendment. But this provision, like much of the Constitution, enjoins the government from engaging in certain behavior. It doesn’t bind the actions of private parties. While a private actor may be statutorily barred from engaging in certain forms of discrimination, the Constitution itself does nothing to prevent you or me (or insurance companies) from excluding and discriminating to our hearts’ content.
Invoking the Constitution here, then, in is nothing but a rhetorical device.
And perhaps one could excuse such flourishes if the underlying legislation were sound. Unfortunately, Mr. Kagen’s is not.
Mr. Kagen’s bill would prohibit insurance companies from denying coverage to people due to pre-existing medical conditions. It would also force insurers to “charge the same premium price for the same coverage.” Hence, there would be no “discrimination.” You want insurance? You’ve got it, and at the same price as everyone else.
The result would be more competition and lower prices for everybody, according to Mr. Kagen.
Uh-huh.
Insurance companies don’t deny coverage or charge different premiums to different customers because they get a kick out of it. They do it because of economic reality. My grandparents’ health expenses are much higher than mine. Therefore, if an insurance company is to indemnify them in an economically feasible manner, it needs to charge them more.
Health insurers obviously own no monopoly on such a scheme. Auto insurers “discriminate” against teenage drivers because of their proclivity for reckless driving. Home insurers “discriminate” against people who live in mansions and not shacks. “Discrimination” here is nothing more than an insurer’s ability to factor cost into its pricing structure.
By not being able to charge more for more medically risky customers, an insurance company is faced with two options: write off huge losses on many policies, or raise premiums for everybody. Needless to say, insurers will opt for the latter course of action.
Moreover, the idea of not letting an insurance company deny coverage due to a pre-existing condition undermines the entire concept of insurance. A person would be free to go without insurance, and as soon as a problem occurs, quickly buy a policy. Think Homer Simpson’s strategy when he needed a triple-bypass operation.
Mr. Kagen anticipates this in his legislation, which would allow the federal agency responsible for oversight to create rules preventing people “from enrolling in individual health insurance coverage only after they develop an illness or injury for which such coverage applies.”
Perhaps such rules could be established. Nonetheless, any insurance company that denied coverage would risk lawsuits from the would-be insured disputing the insurer’s grounds for denial. The cost of defending this litigation would add more to everybody’s premiums. Creative plaintiffs could even take a cue from Mr. Kagen and try to argue their constitutional rights have somehow been infringed.
None of this is to say health care reform is not needed. Mr. Kagen’s proposal would also aim to increase pricing disclosure in the health care market. This is laudable and absolutely essential if health care is ever to be subject to the market forces that work for every other product in this country.
Alas, this can’t be divorced from the rest of Mr. Kagen’s “No Discrimination in Health Insurance Act.” Health care raises many tough questions. Raising everybody’s premiums on a phony constitutional premise is not an answer.
Ryan Masse ([email protected]) is a first-year law student.
