Risk had its rewards

DON'T TRY TO SAY IT AS A POLITICIAN IN THE FEW volatile weeks left before the November elections. But it's still true: $10,000 invested in a typical stock market retirement account a decade ago would still leave you considerably better off than that same $10,000 invested in Social Security.

For the conventional wisdom is that you can't afford, on your own, to take care of the risks in life. You need lots of help, the elitists will tell you, to meet the perils that threaten to swallow us all up. In the process, very few of us have ever learned the basics of calculating risk.

That failure is one big reason why health care today is in such a mess.

Half a century ago, John Doe had a pretty straightforward and uncomplicated relationship with his doctor. The little stuff, like eyeglasses and broken arms, he took care of on his own. New babies and appendectomies may have required taking out a bank loan for a year or two, but no more. Things got blurry with the big stuff, though, like cancer and bad car wrecks-which held potential for a family's financial ruin.

So along came health insurance. Intended at first to take the sting out of the big bumps, health insurance was a service whose parameters most of us could at least imagine. Like automobile insurance, where we knew how much we had spent for the car we insured, or homeowner's insurance, where we knew how much we had invested in a particular house, we could calculate, however roughly, what it might cost to be laid up in a hospital for six months or a year with a catastrophic problem. But those were the days before $50,000 heart bypasses and $250,000 premature babies. What started off as comprehensible graduated to the unknowable.

Then things got complicated on another front. For better or for worse, we started tying health insurance to employment. Those with good jobs had good coverage. Those with poor jobs, or no job, had no coverage. But either way, the true cost of health coverage tended to be obscured. If you had a job, the cost of insurance premiums was either covered by the employer or withheld from your paycheck at your own expense. And you missed out on the opportunity to weigh for yourself whether you were getting a good deal. If you didn't have a job, you went without health services, got them at a discount, or had them provided at government expense-but in any case, you again found yourself confused and unable to calculate what those services were really worth.

Tying health coverage to the workplace also tended to group us in ways that were bound to produce new tensions. Why should nonsmokers pay for the higher health claims of smokers? Why should older folks pay for maternity coverage when they knew they wouldn't be having any more babies? In new ways, our ability to calculate our own risks got hopelessly blurred.

Already, most of us had reached the point where we had no idea how much we were paying for what. Like most folks who don't understand complex financial equations, we had become fat targets for anyone wanting to take advantage of us. But we weren't through confusing ourselves. For now, in a variety of ways, we also introduced the government-at federal, state, and local levels-to help sort out the mess we had all created. But in this case, the cure proved to be considerably worse than the disease.

Which is by no means to blame government alone for our present health care mess. Our own greed and gullibility is near the root of our problem. Health care insurance providers are guilty. Insurance companies and HMO pretenders are complicit. Consultants have made a bad situation worse.

But when things have gotten that bad, the last experts you want to call in are government experts. Difficult equations will suddenly take on Einsteinian complexity-and the answers will almost certainly be wrong. Try, for example, the North Carolina mandate through which a young female employee may decline health insurance up through the eighth month of her pregnancy, and then suddenly decide that maternity coverage was maybe something she really wanted after all. One thing for sure the government did for that young woman: It took away all the mystery of risk.

That's what we'd all like, of course. But if our experiment over the last 50 years has taught us anything, it may be that it's better to live with a little risk than to try to manage the messes we create by trying to wipe out risk altogether. Perhaps it's time to bring on the demolition crews for the monster we've created, and start again with something a good bit more modest.