HJNO Mar/Apr 2025

HEALTHCARE JOURNAL OF NEW ORLEANS I  MAR / APR 2025 39 ditions, effectively preventing many individuals from obtaining health insurance altogether. This approach prioritized profit by minimizing the insurer’s risk exposure but left many vulner- able populations without access to affordable healthcare. By the year 2010, 16% of the Ameri- can population, or 46 million people, remained uninsured. The rate of uninsured individuals was even higher in certain demographics, such as low-income individuals, minority groups, and people with preexisting conditions who faced difficulty obtaining coverage due to un- derwriting practices by insurance companies — remember those biblical verses quoted above. Is the practice of underwriting fair? Under- writing is a basic principle of all types of insur- ance, where insurance is not only meant to help an individual guard against unpredictable risk, but also to protect the insurer from going bank- rupt if they run out of money to pay the claims for those who they insure. As some natural di- sasters illustrate, like the recent wildfires in Cali- fornia, sometimes the actuarial risk is so great that it is mathematically impossible for an in- surer to accept the risk of providing coverage. In health insurance, insurers would assert that if they were not allowed to underwrite and ex- clude preexisting conditions, premiums would then have to rise exorbitantly to cover all the additional risk being introduced into the sys- tem. They warned of a possible death spiral for their industry if they were forced to cover ev- eryone, including those with preexisting condi- tions. Why a death spiral? Because if premiums rose too much, then many younger, healthier individuals would simply opt out of purchasing health insurance. The end result would be even higher premiums for the remaining insured, fol- lowed by even more healthy individuals drop- ping out, and so on, until the entire health in- surance injury spiraled itself out of existence. Having insurers provide coverage to every- one regardless of risk or pre-existing condi- tions is called guaranteed issue. However, the private health insurers might insist that if ev- eryone were required to purchase insurance, possibly through some type of mandate, then the excessive risk of high-cost, preexisting con- ditions could be priced into that scenario, and the cost of premiums would stabilize. But let’s suppose that some type of agreement could be reached where everyone would be required to purchase health insurance and that health insurers are in turn required to provide cover- age to everyone, regardless of underlying risk and preexisting conditions. There is still one problem that remains: Since you cannot man- date that someone purchase something that they are unable to afford, there would need to be one more condition in place to enable such a scenario to evolve. There would have to be some type of needs-based subsidy to help those unable to afford health insurance purchase it. What I have just described are the three foundational elements of what became the Patient Protection and Affordable Care Act of 2010, AKA Obamacare: guaranteed is- sue, mandated purchase of health insurance, and needs-based subsidies. By 2022, the per- centage of uninsured individuals dropped in half after the passage of the ACA, but we still had 8% of Americans without health insurance coverage, and healthcare remains more ex- pensive than ever. In 2023, national health ex- penditures grew 7.5%, bringing us up to nearly $5 trillion or roughly 18% of our GDP, making healthcare the single largest expense that we collectively pay as a country, all while our coun- try continues to lag well behind other economi- cally developed countries in basic measures of health like infant mortality and life expectancy. So, what’s wrong with healthcare? It will take several articles to answer that question more completely. But the U.S. being the only eco- nomically developed nation in the world that is not able to insure 100% of its population while being far and away the most expensive health system in the world is at least part of “[T]he U.S. being the only economically developed nation in the world that is not able to get 100% of its population insured while being far and away the most expensive health system in the world is at least part of the problem.” the problem. It is more than clear, based on the public reaction to the murder of United Healthcare CEO Brian Thompson, that many people in this country are quite unhappy with the health insurance industry and with health- care in general, and for good reason. But only people who lack an in-depth understanding of these complex and nuanced issues will at- tempt to simplify this discussion into a polar- ized explanation of smart versus stupid, right versus wrong, or good versus evil. There is fault and blame to be had, and none of the major players can be absolved from responsibility for why things are the way they are currently. In the next article, we will delve into more specifics of health insurance, exploring some of the rea- sons why healthcare is so expensive, including why we have copays and deductibles, along with the concepts of adverse selection and moral hazard. And we will continue the discus- sion of fairness and redistribution as it relates to experience rating versus community rating as we attempt to get to the nature of health insurance, or as some might say, its very soul. n REFERENCES 1 Busse, R.; Blümel, M.; Knieps, F. “Statutory health insurance in Germany: a health system shaped by 135 years of solidarity, self-governance, and competition.” The Lancet 390, issue 10097 (Aug. 26, 2017): 882-97. DOI: 10.1016/S0140- 6736(17)31280-1 2 American Rhetoric. “Ronald Reagan: Radio Ad- dress on Socialized Medicine.” Recorded circa 1961. https://www.americanrhetoric.com/speech- es/ronaldreagansocializedmedicine.htm