Friday, December 07, 2007


Health Care

The more I think about it, the more I realize that the Dems. are barking up the wrong tree with respect to health care in wanting to cover everyone under some universal insurance. Democrats correctly see that we need universal health care in this country and that the market has failed to provide it, so government must step in. However, is it really appropriate to cover everyone under an insurance model? More generally, different groups of people lack health care for different reasons, and having a one-sized fits all mandate for health insurance purchasing plays into people's worst fears of what Democrats would do in government.

Fundamentally, it makes no sense for health insurance to cover health care per se. Does auto insurance cover auto maintanance? Does homeowners insurance cover calls to the plummer? Of course, unlike in those cases, catastrophic medical interventions can sometimes be prevented by appropriate medical care. This is the wonderful idea behind HMOs. But, in practice, insurance companies are out to make money on a quarterly basis, not cover people -- so while it may be in their long term best interests to help people stay well, in the short term, it's more cost and less profit, so you can't count on them to provide coverage.

Now, from the point of view of an employer, health insurance of course would cover regular and preventive care as from their point of view, any health care is insurance that they won't suffer from a shortage of labor. And since much health care has come due to pressure on employers (from unions -- and this evolution is too often forgotten by young turk health care reformers whose plans might undermine a key victory of unions and hence unions per se ... c.f. Santayana on remembering history and recall what workplaces were like before unions!), it is natural for us to link health insurance and health care.

But when the current market fails to provide health care, is it maybe because that link breaks down? Think about the target of health insurance mandates -- healthy single young-'ons like me who can barely afford health insurance. If we choose not to purchase health insurance, it's because the costs outway the benefits. Even in terms of catastrophic illness -- we figure the worst that happens is we are totally screwed financially, which has a finite cost, since we don't have much to begin with. And while that cost (in the case of an auto accident that could do the same thing) is sufficient that we'll pay for auto insurance, major medical insurance is too expensive even for the cost (since the payouts for the company in case of a major medical catastrophe are greater than that for an auto accident, the cost differential makes sense).

So what does the HRC or Edwards plan do? They force us to purchase that health insurance via a mandate in order that our low risk will lower prices all around via community rating. And yet, because our risk is relatively low, we'll have to pay yet more for health insurance than we would with no plan. And the lower elasticity due to a mandate will cause even more price increases -- that's how the market works.

Of course, you can argue that Congress can regulate prices and provide subsidies. But prices will not be adaquately regulated as insurance companies will just threaten to fold if they don't get their way (that's how it's worked with auto insurance, for example). And subsidies for folks making over 200% of the poverty line or so are politically unworkable as they are tarred as wasteful government subsidies to the rich (the GOP almost got away with doing this with SCHIP) -- even if such people cannot afford health insurance, especially in high cost of living areas (a side note -- as a friend of mine pointed out, Dems., in pushing for more progressive tax rate schedules, need to do something to index such schedules to cost of living, otherwise middle class folks will be hit by, e.g., the AMT).

So what'll happen with a health insurance mandate to achieve universal coverage? Young-'uns who don't buy health insurance 'cause they can't afford it (which, indeed, pushes up the cost of health insurance via adverse selection) will find health insurance even less affordable!

The way to universal health care is much simpler -- the Dems. need to stop playing to stereotype and missing the forest for the trees. You achieve universal health care by looking at where the market fails and bridging the gaps with targetted government programs, that can then merge and evolve into a single payer program as more people get enrolled in an expanding government program (which will only happen if the government program actually works well -- it's the power of the market harnessed to ensure that whatever quasi-socialist medicine evolves, it'll actually be better than what we have now!).

Young-'uns, who really only need major medical and also access to very simple sorts of health care (for which they can easily pay out of pocket) can't afford health insurance? Companies already provide discounted major medical to some groups (e.g. college students) -- work with them, bargain with them (and subsidize them?) to provide the same coverage at the same rates for recent college grads! Meanwhile have enough community health centers so that when said young-'uns do get sick (which'll happen maybe once a year), they can pay at cost for a quick check to make sure their lungs are clear and be reminded to stop smoking, wear condoms and drink 0.5-2 drinks a day (no more/no less). This'll be cheaper to the young-'un than forcing them to pay for a $4000+/year policy they cannot afford and which provides services they don't need.

The sick have to pay too much 'cause of adverse selection since the young-'uns don't buy insurance? Well, it would be a lot simpler (and a direct path to single payer) if some single payer, aka the gummint, just paid as if it were the healthy young-'un (which is even better as the single payer can't get sick, unlike young-'uns who still might get sick).


As you fill in the gaps, if you can also ensure delivery of more and better health care to folks, more people will demand that they be included in the plan. And then you'll have single payer or even nationalized health care before you know it!

OTOH, if you mandate people to do anything, the spirit of perversity (note -- I'm using perverse in the way that Boswell and Poe would use it) in people will cause them to rebel and buck the mandate, which'll cause nothing but problems anyway. And then they'll be a backlash ensuring no universal health care will evolve.

In general, I dare say the politically clumsy, counterproductive handling of health care plans in ways that re-enforce negative perceptions of the Democrats is a synecdoche for the larger political failures of the Democratic party. Nu? You'd think this bunch o' losers would have learned its lesson by now, wouldn't you?

Once upon a time I was a youngun' like you. I was riding my bike to and from work (26 miles per day, every day, for 4 years). One early morning I wrecked trying to avoid getting hit by a car. I had insurance. I didn't have to pay cash for X-rays, casts, doc's advice, etc.

My point being, young folks can, and do, have accidents.

This is the first I've wondered into your blog, so don't get me wrong, because I haven't read back entries.

The US has more than enough resources to provide high level health insurance, high level health care to every single resident. A universal coverage program would eliminate so much waste that not only could the people working in the current health care system still be employed, we could probably launch more misguided wars and still have money to spare.

What's his name from one of the healthcare organization took home something like $1.6 BILLION in compensation. If you don't know who I'm mentioning it's easy enough to googlie.

$1.6 Billion.

That would cover a lot of accident prone youngsters and a lot of old, non-contributors.
Hallo MT! Welcome to DAS Blog!

I agree with you 100%.

My point is that health insurance qua insurance that also covers routine health care makes sense for employers to provide for employees as it really is the employers who are insuring themselves against massive employee sickness caused downtime.

But for us healthy young-uns who are not covered by our employers, the only health insurance qua insurance that makes sense is major medical or something along those lines -- as you point out, healthy young-uns do have accidents and even, occassionally, major illnesses.

And we can and do provide major medical at low cost to healthy young-'uns ... but we don't provide universal access to such discounted insurance policies. So why not expand access to them?

OTOH, why have healthy but poor young-'uns subsidize the medical costs of the old and infirm? And then say -- "well, we'll subsidize healthy but poor young-'uns to subsidize health care for the old and infirm"? That just doesn't make sense: why not just subsidize medical care directly?

Why not even forget about the insurance model where it doesn't apply while keeping it where it does apply?

For some reason, though, some progressives, who are otherwise very smart, seem intent on sticking to these complicated subsidizing people to subsidize people schemes that really just are exactly what people fear liberals would do.

As you point out, we certainly can afford to provide health care for all. So why not just do it? Why all the mess with mandates and other things that just serve to verify people's worst suspicions about liberals? And why are some progressive voices so insistent that we shoot ourselves in the foot with un-necessary complexity and ragging on politicians, like Obama (not that I'm necessarily an Obama supporter, but the criticisms of his health care plans are, IMHO, really counterproductive to the liberal cause -- and nu? people accuse Obama of being counterproductive to the development of support for liberalism?) who eschew this complexity?

Of course, part of the problem is the inability of Dems. to talk about Details(TM): in terms of health care they are either shooting themselves (and our party) in the foot by giving actual details which can be used as fodder for attack ads or they are fondling the duck by not giving any information and sounding to everyone like they are slick con-artists.

I've actually talked about the need for Dems. to give Details(TM) before (and I believe defined Fondle the Duck) ... but health care is a good illustration. Here, FWIW, the Dems. would do well to listen to Reich who understands what Details(TM) are in this context.

Anyway -- again ... Welcome to DAS Blog!
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