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Discrimination: A Cornerstone of American Successs

By Pete

For all of the good that civil rights crusaders have done over the years, one of the few disservices I believe they’ve rendered to our society is the vilification of the word “discriminate.”

At it’s core, “discrimination” is not inherently evil. In fact, unbeknownst to many, nary a day goes by during which we don’t discriminate:

1. to mark or perceive the distinguishing or peculiar features of
2. to distinguish by discerning or exposing differences; especially: to distinguish from another like object

Unfortunately, the word is loaded down with a pile of extra meaning and connotation. So much so, that, during a meeting to go over changes to the employee handbook at my last company, the director of H.R. and the Vice-president of the company insisted, quite vehemently, that their company-wide policy (which banned all discrimination) was valid because they believed that all discrimination was illegal.

It took all of my strength to keep from asking how they even got dressed in the morning without violating the company policy. Who knows, maybe they wore all of their clothes every day. But, even then, which ones do you put on first? And let’s not even talk about breakfast.

But I digress.

Matt posted about President Obama’s New York Times Op-Ed about health care reform this morning, so I took a few minutes to read it. As I expected, the President spends virtually all of his time arguing for reform in general and not nearly enough for the specific kind of reform that he has proposed and is trying to ram through congress.

There were a number of places where Obama made arguments that seemed either intentionally misleading or hopelessly naive (still not sure which), but the one that gave rise to this post was here:

In the coming weeks, the cynics and the naysayers will continue to exploit fear and concerns for political gain. But for all the scare tactics out there, what?s truly scary ? truly risky ? is the prospect of doing nothing. If we maintain the status quo, we will continue to see 14,000 Americans lose their health insurance every day. Premiums will continue to skyrocket. Our deficit will continue to grow. And insurance companies will continue to profit by discriminating against sick people.

Ignoring the comment about the deficit, this last appeal to emotion ignores the very concept of insurance companies. Insurance companies profit (ever a dirty word in the minds of liberals) by spending less money than they bring in¹. They primarily do this by charging people who they perceive to be low-risk less money and people who they perceive to be high-risk more. This “discrimination” is also seen as “fair” when you’re on the low-risk side of things.

(Please pardon this brief detour into history:)

I spent several summers working for the systems department at State Farm in college. Every summer they introduced the company to the new crop of interns with a presentation about the history of the company. The company was started by G.J. Mecherle because he believed that farmers should pay less for car insurance because they drove less.

When the company started, the way it worked (if memory serves) was by spreading the previous period’s costs (including policy pay-outs) evenly over the policy-holders. Fewer accidents meant, very directly, lower premiums. This was a very easy-to-administer system, and made enough sense for a mutual company, but as the company grew, Mecherle knew that he would eventually have to set rates and analyze risk prospectively rather than retroactively.

Thus began the company’s long history of being like Every Other Insurance Company and “discriminating” against those who are (statistically) likely to cost the company the most money: bad drivers.

(…we now return to our irregularly scheduled rant, already in progress…)

Discrimination is the absolute hallmark of American capitalism: all other things being equal, we “discriminate” against the higher-priced good, forcing companies to lower their prices and costs in order to compete.

Imagine what our car insurance rates would be like if they charged Mary Neverhadanaccident the same amount as they charged Joe Justgotmythirddeeyoueye.

Earlier in that same Op-Ed, our President wrote this:

A 2007 national survey actually shows that insurance companies discriminated against more than 12 million Americans in the previous three years because they had a pre-existing illness or condition.

But what does he mean by “discriminate” (emphasis supplied)?

A 2007 national survey actually shows that insurance companies discriminated against more than 12 million Americans in the previous three years because they had a pre-existing illness or condition. The companies either refused to cover the person, refused to cover a specific illness or condition or charged a higher premium.

You don’t say. Someone who is already sick is getting charged more than someone who isn’t? I wonder why that is. Maybe because the former is looking to start drawing on a system they haven’t paid a cent into yet? Maybe because, absent those sort of rules, someone could sign up for health insurance a week before they went in for major surgery and then cancel the policy once they’re done with their physical therapy, leaving everyone else responsible for their bill?

Now, we can debate current practice. We can talk about whether a particular company’s definition of “pre-existing condition” is overly-broad. We can even question whether the rules as they’re implemented now have gone beyond corporate self-preservation and into predatory territory.

What we shouldn’t do is pretend like “discriminating” against the sick is some sort of inherently evil practice.

What we should all be asking is how any private company is going to continue to do business if they can’t “discriminate” against the customers who would draw out of a system that they haven’t paid into. It’s easy to see how the government-sponsored company will do it: lots and lots of tax dollars. Further treatment of that is probably better reserved for a post that hadn’t eclipsed 1,000 words before approaching it, but remember this:

The next time you see someone using the word “discriminate” to demonize something, engage your critical thinking skills and ask: is this kind of discrimination good or bad?

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1. Something we should all hope to do in our day to day lives, but it’s good to see the President leading by example vis-a-vis “profit” by making sure that the government spends more than it brings in.

Full post as published by PeteHoliday.com on August 16, 2009 (boomark / email).