March 11, 2010

Obamacare and Las Vegas

By Matt Spivey

Democrats need to learn a little lesson about Sin City. I love a good gambling story. Whether it's a hotshot blackjack player counting cards, a housewife who pulls the lever on million dollar slot, or a sports bettor sweating over the point spread during the final minutes of a playoff game, it doesn't matter. Stories that teeter between wealth and ruin are endlessly fascinating.

It's the rush of possibly beating the house that drives customers, and the pursuit of a profit that drives casinos. It's a mutual relationship where both parties consent to the potential for winning and the risk of losing. And casinos clean up...big time. Why? Because the house always has the advantage. And all customers are aware that the odds are stacked against them. The casinos set the rules, they own the venue, and they put up the risk of capital. Americans lose nearly $100 billion in gambling every year. And in Las Vegas, it's all perfectly legal.

Meanwhile, according to the Weekly Standard, the ten largest health insurance providers earned about $8 billion in 2008 profits...combined.

Let's connect the dots between Vegas casinos and our current health insurance system. Buying health insurance is a bet. As a customer, I am betting that I will probably get sick or injured sometime in the near future. The house, the insurance provider -- after examining my particular medical history and current lifestyle habits -- is betting that I won't. If I have to go to the hospital this year, I collect on my wager by obtaining very valuable services for my minimal dollars spent. If I remain healthy, then the insurance provider keeps my bet in the form of a premium. Each year, my insurance company and I play this game, since we both know the risks to our wagers.

Here's where our politicians don't get how the gamble works. If I contact my insurer to place my premium wager while having a preexisting condition, I am putting the house at a disadvantage.The same scenario exists at Caesar's Palace when a sports bettor has a hot tip on an injured quarterback and wants to lay enormous amounts of cash against a spread. The bettor's information is a preexisting condition that puts the house at the disadvantage. To compensate, the casino will do one of two things: Either the bettor will have limits imposed upon his wager so he will not be allowed to win too much, or he will be asked to leave the casino entirely, completely disallowed to play.

The same occurs with those with heart conditions, genetic diseases, or other afflictions that are sure to incur expensive coverage. The house (the insurance company) knows that they are very likely to get sick, thus costing a huge payout. Therefore, limits are placed upon them in the form of expensive premiums and high deductibles -- or in the worst case, no coverage is offered at all by that particular company.

Though it appears that only customers are affected by these rules of exchange, the casinos face consequences as well. If Caesar's refuses too many people -- who are then able to take their business down the Strip to the MGM Grand, or to an offshore bookmaker, or even to a personal acquaintance who takes bets -- then Caesar's is potentially missing out on a lot of income. Similarly, if Aetna refuses too many clients, then the potential for business expands for other large providers like Blue Cross, for lesser known companies in other states, or even for cash clinics and charity hospitals. Competition for customers will always exist if the market allows it.

And as much as Democrats want to use the word "right" when describing health coverage, patients have no more "right" to demand service than a gambler does at a sportsbook counter.

While the story of a person battling with health insurance companies is nowhere near as entertaining as one about a hot roller at a craps table, the conditions are the same. A private business is assuming a tremendous amount of risk on the behalf of a customer. When an inconsequential and unaccountable third party, like the federal government, starts forcing private companies to take on more than they are capable of or willing to, those companies go out of business. And as we are learning, even the federal government is not immune to going out of business.

Surely, we can agree that doctors and nurses should do everything they can to care for all patients, and they have taken an oath to do so. Forcing involvement of any other parties beyond that infringes upon the free exchange between customers and providers.

Even in Sin City, that is unethical.