Why Health Insurance Doesn't Work

It is actually against their interest for insurers to compete on giving us the best care. It's not simply that they're not doing it, but given the structure of the marketplace, they shouldn't do it.

Ezra Klein | February 27, 2008

'The state's largest for-profit health insurer is asking California physicians to look for conditions it can use to cancel their new patients' medical coverage," said the first line of an expose in the Los Angeles Times earlier this month. The subject was Blue Cross' practice of enlisting doctors to help them deny the claims of sick individuals.

What's strange, however, is that everyone acted like the insurer was doing something wrong. Gov. Arnold Schwarzenegger accused them of asking doctors to "rat out the patients." Hillary Clinton gave the company a similar lashing, in the same tone of moral outrage used by most of those quoted in the article. Within a few days, the policy was ended.