Analysis: Are insured the real victims?

WASHINGTON, May 31 (UPI) -- In the ongoing healthcare debate, politicians' emphasis on the uninsured is misplaced, scholars say, and ignores the real underdogs of the system.

The current healthcare program exploits low- and middle-income Americans who pay exorbitant premiums for care many never receive, according to two Duke University professors.

Most workers have few health insurance options and must decide between high premium payments or no coverage at all.

"The system works like an extortion scheme, which forces consumers to choose to pay what the system demands of them or put their families' health at risk," said Clark Havighurst, a Duke Law School professor, at a panel discussion held Thursday at the American Enterprise Institute. "They're the victims who seem to be ignored when everyone wants to talk about the uninsured."

Redistribution of resources through government programs and by insurance companies leads to inequity, Havighurst and one of his colleagues argued in a recently published paper.

"The U.S. healthcare system operates more like a robber baron than like the Robin Hood it is reputed to be, taking excessive amounts from ordinary payers of health insurance premiums and enriching, directly or indirectly, the healthcare industry and its high-income customers," Havighurst said.

Most health insurance plans include a broad range of comprehensive coverage, which helps offset prices for both commonplace problems and unusual emergencies or procedures. But such a package comes at a high price and constitutes an unnecessary expense for most workers, Havighurst said.

"People might be better off taking some modest risks with their health," he said. "If people want a more efficient, limited plan, they should be able to get it."

Ironically, consumers have historically demanded more comprehensive health plans. However, Havighurst said he thinks this is because employees don't see the real costs of healthcare, as the money they pay usually gets pulled directly out of their salaries.

"They have a much bigger stake in this than they know," he said. "They can't see that when a politician promises to make more and better healthcare available, they'll have to pay more" to get it.

Insurance companies have shied away from competitive coverage for legal and legislative reasons, and also because the high prices paid by low- and middle-income individuals sustain other costs in the system, said Barak Richman, Duke law professor and co-author of "Distributive Injustice(s) in American Health Care."

Health insurance premiums act as head taxes -- a flat rate charged regardless of income -- disproportionately affecting low- and middle-income individuals with health insurance, Richman said.

This inequality is exacerbated by a greater tendency for the affluent to take advantage of services provided in an insurance plan than lower-income individuals enrolled in the same program. So even though everyone pays the same entry fee, high-income individuals use more of the services subsidized by the premiums.

Havighurst and Richman identified four factors that might deter low- and middle-income individuals from accessing care: inability to pay co-payments, difficulty in getting off work to visit a physician, provider practices and consumer preferences.

Provider practices imply that some discrimination among medical practitioners may lead to less care for poor minorities.

"There is a good amount of evidence that provider referrals are biased by race and by income," Richman said. "Providers are more likely to refer for high-cost care high-income, white individuals."

Many experts believe current healthcare costs could be greatly reduced for consumers if a more cost-conscious model were followed. Eliminating fee-for-service pricing -- where consumers pay for the amount of healthcare they receive and not the quality -- could play a vital role in this effort, said Alain Enthoven, professor of public and private management at Stanford University.

"Fee-for-service is bad for your wallet and bad for your health," he said. "It punishes good care with less revenue."

A better option might be payment plans that focus on effectiveness and lowering cost.

"If we got into a competitive model and sustained it over time, with cost-conscious consumers, we could spend about half as much," Enthoven said.

In the end, market forces might drive down costs, or force more people to join the growing number of uninsured, said Thomas Miller, resident fellow on healthcare policy and regulation at AEI.

"At a certain point, you stop doing stupid things," he said. "We might be nearing the point where continuing to raise health insurance premiums ... may generate less rather than more revenue because people are dropping coverage."