The Business Ethics Blog

I just watched “Sicko”, the latest installment in Michael Moore’s “poke-tragic-fun-at-the-Establishment” series. For those of you who haven’t already seen it (or read about it ad nauseum), Sicko is a two-hour critique of the American healthcare “system” (though whether it deserves to be called a “system” is subject to debate, I guess.)

The film makes a lot of points, some more fair than others. Key take-home messages include:

• People in the US who lack private health insurance get pretty lousy healthcare.
• People in the US who have private health insurance sometimes also get pretty lousy healthcare.
• Insurance companies in the US are trying to make lots of money, and not so much trying to help sick people.
• All the politicians work for the insurance companies (or the drug companies, or both).
• People in countries such as Canada, the UK, France, and Cuba (yes Cuba) get access to very good healthcare, without having to pay out-of-pocket.
• In the US, even rescue workers who worked the wreckage of the Twin Towers after 9/11 can’t get decent treatment for the illnesses resulting from that work. Unless they go to Cuba, where they can apparently get treated very well, for free.

It’s an entertaining movie overall, of course. But the parts of the movie that are relevant to this blog involve the behaviour of insurance companies. The critique offered there — insurance companies are just out to make money, not to help people — was pretty seriously lacking in subtlety. As I watched, I kept seeing the behaviour of those companies as the sad but inevitable consequence of leaving health insurance to the market. It’s not generally wrong to do your best to make a profit, and to limit the benefits you offer consumers. All companies do that; it’s just that stories about insurance companies denying coverage to women with breast cancer are a lot sadder than stories about Wal-Mart failing to accept merchandise returned without a receipt. But one aspect of the behaviour of insurance companies that is seriously unethical involves their use of information asymmetries. Insurance companies seemingly rely upon the fact that insurance is a complicated product, and that they know much more about the value of the good they’re selling than consumers do. So they can get away with selling me an insurance policy that doesn’t meet my needs, because in some ways they know my needs better than I do. This is what Joe Heath calls a [socially] “non-preferred competitive strategy.” That is, when companies make profits by capitalizing on consumer ignorance, they’re failing to engage in the kind of socially-beneficial competitive behaviour that makes the free market worthwhile.

That alone makes Sicko worth a look by anyone interested in business ethics.

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Joe Heath’s argument about non-preferred competitive strategies can be found in his paper, “Business Ethics Without Stakeholders,” Business Ethics Quarterly, 2006 (Vol. 16, No.3).
Note: I was offered and accepted a free advance copy of the DVD of Sicko by the film’s distributer, to review on this blog.