November 17, 2004

Fixing Something Broken on Purpose

Justin Katz

I've admitted before that I find healthcare to be an eye-glazing issue — especially in Rhode Island. Sometimes it seems reasonable to wonder whether that's an effect that the industry actively encourages. As William Gamble's analysis suggests (to my mind, anyway), Blue Cross of Rhode Island could hardly have been better designed for corruption if that had been the intention all along:

Both the law and the market provide six methods to stop agents from taking anything that is not nailed down. They are: 1) business failure, 2) the market for corporate control, 3) managerial duties required by law, 4) direct managerial financial incentives, 5) corporate-governance oversight, and 6) shareholder empowerment. None of these applies to Blue Cross.

His solution?

Try selling it. It must be worth something. Why does Rhode Island, a small state with a small insurance pool, need a separate Blue Cross? Why not merge it with Massachusetts Blue Cross? Why not a New England Blue Cross -- a company large enough to negotiate with all providers?

I've noticed, here and there around my life, that smaller groups — a school system, a town government, a small office in a limited market — are often infested with backstabbing and advantage-taking out of proportion to their actual significance. The temptation of becoming a small pond big fish seems apt to drive people mad. (Perhaps because a certain sort of person can become such a creature although he wouldn't survive in a broader pool.) But as anybody who becomes addicted to the Flash game Fishy! will learn, ambition quickly becomes its own undoing in an enclosed ecosystem, and unfortunately, the individual isn't likely to be the only one undone.