Over on the TAC main blog, Philip Giraldi illustrates through his own situation the drawbacks of our healthcare system (then a lot of other people add their own stories). He says it “denies insurance to those who actually need it” and says that “insurance companies exist to make money, not to make people healthy, and there is no money to be made in paying out for those who are sick.” That’s true, but I notice that an important concept is missing from his post, and it take a few commenters later on to introduce it: risk.

I work at a software company in the health insurance industry – slow day at work – and in conversation I often feel called to defend my people from charges of greed. I like to point out that to make its money, the insurance company accepts responsibility for a portion of your risk. This is risk that you introduce into your own life, and that you would likely bear on your own if there were not insurance. In most cases, the insurance company tells you exactly how much of your risk it will bear before you sign a policy, and in almost all cases, it honors that commitment when the time comes. People pay a lot for that service, but in return we get a lot of high-tech cures for previously incurable health problems (and someone could probably prove that if we didn’t pay so much, we wouldn’t have many of the drugs and high-tech procedures that we have today, because the health care providers ultimately get most of that money and they need it for R&D).

Anway, all of this is contractual logic, as the Pope called it back in Chapter 3. And there are 2 other forms of logic our current economy requires – political logic (just laws) and the logic of the gift (forms of redistribution). So, to use health insurance as a model, you have to have the contract, the involvement of the law/politcs, and the gift. I understand the contractual portion. And I think we’re seeing some of the legislation worked out now. But I’m still having a hard time figuring out how to factor risk into the latter two types of economic logic. And the more I think about it, the more I think this is a true problem in a lot of economic issues.

How should legislation account for individual risk (in economics, need derived from personal circumstances?) through a large group of diverse individuals? How do you best distribute responsibility for risk, when that risk has its origin in the individual?

In the Acts of the Apostles, they all pitched in, from each according to his means, and distributed to each according to his needs. How does that work with lung cancer treatment? What about in the future, when science can extend life by 30-40 years through an expensive combo of drugs and gene therapy or whatnot? If such a treatment becomes readily available, should it also be affordable to everyone, and if it isn’t, how can access to it become just? Who needs it most? To be more abstract, how do you justly spread out the cost of pushing back death, and how do you justly choose the patients? This may sound really far-off and space age now, but I’ll bet it’s an issue for my grandkids.

So, I’ve made myself dizzy here. Anyway, I’m no expert in economics, but I think the concept of risk is underneath a lot of the issues the Pope is talking about. I hope there’s a way someone can use the philosophy in this encyclical to clarify our understanding and management of risk, and maybe we can apply that to the healthcare debate.

He could maybe have also added that the poor can serve to perpetuate the social status of the aid-givers, in that the moral worth of, for example, Bono is elevated by his continued association with serving the poor, or by estimations of his commitment to serving the poor, not necessarily by the benefit the poor take from his work. That’s not to pick on Bono, who I’m sure is a great guy, nor should anyone assume that he, or any other aid group or bleeding-heart celebrity, or aid-giving nation like the US, is in it for the good publicity. Because that’s kind of beyond their control.

But social status/reputation is another “wrong reason” for service, and you can reap that reward without acheiving any other end, without improving the situation of the poor. So it might be considered another danger in the relationship between developed communities and the underdeveloped. I’d like to hear more of what the Pope has to say about humility in economic or “gratuitous”/aid-giving relationships, and how it can be better practiced, especially by some of the powerful and infrequently humbled parties involved (many of which I’m associated with, as a white middle-class American and a Catholic and a person nominally represented by the UN and the World Bank and the IMF).