The talk of the day is healthcare, about what kind of reforms the U.S. should make to the system.  Whether these reforms should remain only within the private system, whether there should be some kind of hybrid system, or whether the government should shoulder the responsibility.

Right now, I don’t want to talk about the future direction of healthcare in the U.S., but instead simply talk about the health insurance companies.  Recently, health insurers, and in particular one company, Wellpoint, were grilled by Congress about the practice of rescission, or the canceling of the coverage of an existing customer.  The insurance companies claim it helps them fight fraud, while critics alledge that it allows the companies to cancel accounts when they feel the costs are starting to become too high for their liking.  Our own Jason Arvak recently described rescission as “the arbitrary denial of coverage using flimsy and even dishonest excuses.”

Admittedly, I don’t know much about rescission itself, so I cannot comment as to whether Jason’s assertions are correct or not.  However, it would not be the first time I’ve heard of sick patients having their insurance pulled when it looked like the going was getting tough.  Yet, perhaps better well known is the practice of denying coverage from the beginning on the basis of pre-existing conditions.  This is definitely a policy with which I disagree.

I disagree with pre-existing condition denials and the rescission that Jason describes because I believe they are simply morally wrong to do.  They place the social responsibilities of health insurance companies on the backburner in favor of their corporate responsibilities.

You might ask, “Social responsibilities of health insurance companies?”  I thought health insurers were corporation, not charities.

And you would be right.  They are not charities.  I am not here suggesting that these companies, WellPoint, UnitedHealth, Aetna, or any others, offer their services for free.  What I am suggesting is that these companies are placed in a special category, one in which they have dual responsibilities: one to shareholders, yes, but also one to society.  Obviously they must show profit, but at the same time, these companies are the gatekeepers of health care in the United States.  You can get health care without them in some places, but for many situations, doctors require you to have health care.  Also, many surgical procedures are prohibitively expesive to most people alone, and thus are covered by their health insurance company.

40+ million Americans may not have any type of health insurance, but the vast majority do.  So for most people, health insurance companies are the only way to go if you seriously want to combat what ails you.

Previously, I have often said that the news media held the unique status of serving both the interests of society and their shareholders, and can often find themselves in trouble when they try to serve up profit at the expense of objectivity in their reporting.  The same could be said of the health insurance industry.  They have to make the shareholders happy, but I believe that this shouldn’t be at the expense of denying people coverage just because they developed a very expensive-to-treat condition 20 years ago.  Or even six months ago.

I also understand the problems of taking on people with expensive conditions.  I know that these people become a burden on the rest of the company’s customers because they cost more to treat than all the rest.  In some cases, it could result in higher premiums.  I understand and respect the view that as much as the ill person may not have contributed to the development of their condition, the well person did not do anything to deserve the raising of their premiums.  It is essentially the private sector version of the debate over taxes, whereas the government needs funding for services, but some people may not benefit from these services.  It happens with public education all the time, for example.

However, because of the near ubiquitous nature of the health insurance industry in American life, it seems to me that they have a social responsibility to take on those with pre-existing conditions.  Like I said before, I’m not asking companies to take on these people for free.  This presents one of two obvious options for the industry to consider:

• Treat their customer base as a pool, where people help pay for the treatment of other customers.  This is controversial because it would probably cause premiums to go up for all.
• Treat their customers on a case-by-case basis, and evaluate the cost of treating their specific conditions.  This would make the individual person pay more, which is controversial because there are few medical conditions that people simply wished on themselves.

There is also the option of insurance cooperatives that Jason mentioned in his article, which is an option that keeps out the insurance company altogether.  I’m interested to see where that proposal goes.  Even if it takes off, it seems unlikely that cooperatives of individuals (which sounds a lot like an interest group or trade union) could overpower the professional health care providers.  So, the options I outlined above still matter.

I think that insurance companies have a moral imperative to take on anybody who needs coverage, simply because there is no other way to go (beside state-run health care programs).  Employer-based programs are great (I myself benefit from one), but not everyone can get one of these, meaning that they need to get their own insurance.  Cooperatives may be a future option for these people, but right now, they need to be sure they can get coverage.  Turing them away because they may have an expensive condition doesn’t seem like the wrong way to go.  However, insurance companies can’t be expected to take people on for free.  So the question is whether everyone pays for these cases, or does the individual get a bigger bill?

Whatever the answer is, insurance companies must realize that they have dual responsibilities: one to the shareholders, but also one to society.