By Donella Meadows

–January 12, 1989–

“Dear Member Insured:” said the letter from my health insurance company, “A year ago we wrote that rising medical costs and Plan usage meant serious rate increases. Unfortunately, the picture has not changed.”

“Yet you, along with the majority of our insureds, have kept your health care expenses to a minimum. Therefore, we have been able to keep your rate increase within the 20-30 percent national average of the increased costs of medical care.”

Enclosed was my bill, 25 percent higher than the previous one.

So I am considering dropping my insurance and throwing myself onto the harsh mercies of the great American public health system — as 30 percent of the population has already done. I’m self-employed and self-insured. I’ve shopped around for the cheapest coverage, and still I can barely afford $1000 deductible. Health care now takes one out of every 12 after-tax dollars I earn — all of which goes to insurance, not one penny to actual health care. With house insurance and car insurance, I am spending one-fifth of my disposable income on protection against disaster. The insurance itself is beginning to be disaster enough.

Something is terribly wrong with a health insurance system that ordinary working people can’t afford. Something is wildly out of control when one sector of the economy has 25 percent cost increases while general inflation is less than five percent. But when you try to figure out what has suddenly happened to an insurance system that worked fine for decades, you find that everyone has a different theory.

Many people blame the greedy doctors. If doctors didn’t make ten times as much as the average patient, the average patient might be able to afford their services. If doctors didn’t pad bills, order unnecessary tests, and perform overexpensive procedures, insurance would cost at least 10 percent less, say the insurance companies. (The equivalent in the car insurance system is the mechanic who can turn a bent fender into an $800 repair bill.)

Doctors tell me the problem is greedy patients, greedy lawyers, and indulgent juries, who collaborate on outrageous malpractice suits — generous compensation for the pain, suffering, and lost income of the litigant’s wife, children, dog, and second cousins. When the doctors show me their malpractice insurance bills, I can see they’ve got a point. They’re caught up in the insurance mess as much as I am.

Surely, then, the problem is greedy insurance companies. That’s the reasoning behind California’s Proposition 103, in which angry voters decided to cut their own automobile insurance rates. The result, say the insurance companies as they pull out of California, is that they lose money. Whoever is profiting from the enormous increase in insurance costs, they assure us, it isn’t them.

There seems to be some truth to that claim too. Settlements in all branches of insurance are rising by 20-25 percent per year.

A friend who is a consultant to the business tells me, however, that the companies have some responsibility for those rising claims. Insurance is attracting new players, people more interested in managing great money pools than in providing insurance. The average claims adjuster is a kid just out of college with low pay and low status, who will only stay in the job 2-3 years. If there were more professionalism in the insurance part of the business, claims could go down by 10-40 percent, the consultant tells me, and customers would still feel (and be) better treated.

That theory sounds plausible to me, too. And there are other theories. The problem is the people who eat too much, exercise too little, smoke, won’t wear seat belts, contract AIDS, and charge the rest of us for their foolishness. The problem is the entry of the government with its layers of well-paid, inefficient paper-pushers. The problem is folks like me, healthy people who drop out of the system, leaving the less healthy behind.

Maybe the fundamental problem underneath all the others is the general culture of greed that has been so cheerfully encouraged in our nation over the past decade. Greed has a tendency to feed upon itself. A few thirsty lawyers and clients go for big damages, which sets the legal precedent for others to do so. A few doctors abuse the system, make out like the bandits they are, and tempt others to get in on the game. A few companies learn they can make more on the stock market than on selling policies, and the business attracts gamblers rather than insurers.

No insurance system can work without a high level of integrity in its customers and its practitioners. The opposite of integrity is, I guess, disintegration.

My insurance company ended its letter with masterful understatement, “Our present system of private health insurance, independent practitioners, hospitals, and HMO’s is probably not the most efficient and equitable model for delivering health care.”

Let’s say that more loudly and clearly. It’s a lousy system. It deprives people of decent health care. It’s destroying itself. It will not be fixed by blaming it on one set of scapegoats, or by the reform of one set of actors, or by shifting it all to the public or the private sector, or by voters setting the rates. The insurance crisis calls for major restructuring and for high-level, clear-thinking leadership — leadership that above all insists upon and sets an example of steadfast integrity.

Copyright Sustainability Institute 1990