Ruminations of an Expatriate

First, I assure you that I am completely appreciative of the virtues of private enterprise; and that, generally, the profit motive and competition provide powerful incentives for innovation, increased productivity, and lower prices. So long as the market is truly free.

I think I’ve observed before that if, for instance, Cubans who work in currently “state” owned enterprises actually owned the enterprise (not necessarily the real property upon which the enterprise operates) and, thus gained from increased business, the enterprises would be cleaner, service would improve, product theft for sale on the black market would drop, and productivity would rise. Such would be a system of real communism, I think, as opposed to the current state capitalist system which reigns in Cuba.

When the free market is impinged, regulation of that market by us, through our government, is required. And sometimes it even serves the general welfare to create a public entity to compete with privately owned enterprises which have continuously ill-served the general welfare. Wasn’t it Adam Smith who long ago observed that markets, economic interactions between individuals pursuing their private interests, do not necessarily operate in the interests of the general welfare; and that it is up to governments to regulate such markets to ensure the general welfare is served?

Such is the case with the USA currently prevailing system of providing health insurance. The system has resulted in the most expensive second rate health care system money can buy.

The USA government was created to serve six Constitutionally established purposes.

We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America.

While it is a duty of the USA government to “promote the general welfare”, it is not the duty of government to guarantee profits to private interests. Our provision to ourselves, through our government, of a system of universal health insurance at the lowest possible cost, it seems to me, clearly falls within the promotion of the general welfare.

Political conditions have never in my life time been more propitious to the creation of a single-payer, publicly owned, not for profit USA health insurance system. Such a system would provide health insurance to all at the least cost, as we the subscribers would pay no profits to shareholders, nothing for advertising, nor inflated executive compensation. A single payer system would reduce administrative costs of medical providers, as they would have but one insurance entity from which to seek compensation, rather than the dozens of private insurers with which they now deal.

The USA citizenry, having for years been economically looted by the private health insurers, has never been more receptive to establishment of a public health insurance option.

Enactment by Congress of a true single payer system, however, is unlikely, as Congress has essentially been bought and sold by medical professionals, health insurers, and pharmaceutical industry representatives. One may visit the OpenSecrets.org, and nose around, to learn of the extent of campaign contributions by such entities.

Current discussions relative to health care reform seem to center, at present, around the question as to whether a public health insurance system should be established to provide competition to the private health insurers, which have demonstrated an unwillingness to contain costs. The private insurers have no incentive to contain costs, they simply raise rates each year.

Obama and democratic Congressional heavy hitters have indicated their support for the public option, while medical and pharmaceutical industry interests have announced their opposition, as they recognize their privately held entities will not be able to compete with the lower administrative costs and non-profit nature of a public insurance system.

The current health insurance reform discussions bring to mind my days working as an administrator for East Grays Harbor County, WA local governments.

During the early 1980s liability insurance rates were surging, causing WA local governments to look for an alternative. City’s had theretofore been insured by privately owned insurers through policies secured usually through a local broker, after calling for bids.

The private insurers would base decisions as to whether to settle or fight claims based upon purely economic considerations, that is which would be cheaper, without any consideration as to whether the claim was valid. I will not burden you with the details of a particularly disgusting example of a private insurer paying a claim which disparaged the good work of volunteer municipal ambulance personnel because paying was cheaper than fighting the unjust claim.

The private insurers, through their practice of paying nuisance claims rather than fighting, encouraged the filing of claims against local governments by trial attorneys who understood the game. And with a president at the time telling us that “government is the problem”, jurors were predisposed to rule against governments in those cases which went to trial.

Responding to the surging insurance rates, eight Puget Sound area cities joined forces to create the Puget Sound Cities Insurance Authority, since the late 1980s the Washington Cities Insurance Authority (WCIA), through which to pool their risks and buy insurance as a group. Most cities in Grays Harbor County joined the Authority in the mid to late 1980s, Montesano, I think, being the first. Since, the organization has expanded to over 100 WA governmental entity members; and WA counties, as well as local governments around the country, have created similar public insurance authorities.

A representative of each member city serves on the Authority’s board of directors, which not only establishes the organization’s policies but also decides the Authority’s approach to major claims against its member cities.

The Authority’s board, early on, established the principle that it would fight unjust claims against its members, so as to help turn the tide of increasing claims against local governments, which had become favored targets of trial attorneys; and to promptly accept responsibility and settle just claims. Since, the Authority has gained the reputation amongst trial attorneys that it will fight claims on principle, rather than to decide to fight or settle based upon an economic calculations as do privately owned insurers. Consequently claims against WCIA member entities have declined.

Eventually the WCIA board decided to self-insure, a transition which evolved from the initial group purchasing of insurance, to a mix of self-insurance and the purchase of insurance to cover catastrophic loses, to fully self-insured. Eventually, the Authority members self-insured their vehicle exposures, boiler insurance, fidelity bonding, and other such insurance services.

Hundreds of City Councilpersons from throughout WA decided to save the taxpayers of their respective cities lots of money by establishing and joining a publicly owned insurance authority, which has contained costs by taking a principled, rather than simply an economic, stand and through aggressive training and risk management programs to which members must adhere.

There is no reason why the same benefits shouldn’t accrue from a publicly owned, not -for-profit health insurance system.

Please send a message to your congresspersons and senators telling them you support a publicly owned, not for profit, single payer health insurance system; and demanding that, at a minimum, a public insurance option be provided to all USA residents so that consumers have a choice.

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