I understand what you’re saying, but I wouldn’t be so quick to discount the importance of private business owners retaining the capacity to provide health benefits to their employees. Unchecked healthcare costs could easily make health benefits in the private sector a thing of the past, and business owners know first-hand how rapidly that day is approaching.
I don’t really think I’m misstating the problem. I think maybe we disagree as to the motivations of big business. You think they’re looking to implement the most efficient healthcare system for Americans, and I think they’re looking to shift the costs of healthcare to someone other than themselves. Therefore I don’t think that their opinion is all that persuasive, as it’s based purely on an ulterior motive.
What can I say, I guess I’m more cynical about big business than you are.
The problem with that is that if individuals have to insure themselves, we’re going to be in a world of hurt.
That’s because insurance companies insure individuals based on individual risk, preexisting conditions, age, etc. As a result, rates can and are quite high for individuals. However, for group insurance, rates are a lot lower because as a group you get a lot more statistical predictability, which is something insurance companies will pay for. It’s why employer based healthcare is pretty much always cheaper than individuals. You would to some extent have younger participants paying for older participants, but in the absence of that, you would have a lot of older people simply uncovered. Its simply more financially efficient to go as a group.
It’s not unlike somebody building a portfolio of only one stock. With a one stock portfolio, you’d demand a pretty high return to hold that kind of risk. But if you had a 30 stock portfolio, you’d worry a lot less about the impact of any additional stock to the portfolio.
** Its simply more financially efficient to go as a group. **
Either way, the insurance company insures the same group of people.
Haven’t seen the movie. I tend to think along the lines of a libertarian blogger I check in on occasionally, and he just posted this blurb which I believe is relevant to some of the thoughts expressed here.
From http://www.coyoteblog.com/coyote_blog/
The “Crisis” Looks a Lot Like State-Run Medicine
The USAToday published a front-page story today arguing that a health care “crisis” looks a lot like Houston, Texas. I would argue, from their descriptions, that a health care “crisis” looks exactly like state-run medicine.
Ijeoma Onye awoke one day last month short of breath, her head pounding. Her daughter, Ebere Hawkins, drove her 45 minutes from Katy, Texas, to Ben Taub General Hospital, where people without health insurance pay little or nothing for treatment.
Onye, 62, waited four hours to be seen. Still, going to the emergency room was faster than getting an appointment. For that, “you have to wait months,” Hawkins says…
The huge number of uninsured residents here means that health officials must make tough decisions every day about who gets treated and when. “Does this mean rationing? You bet it does,” says Kenneth Mattox, chief of staff at Ben Taub, the Houston area’s pre-eminent trauma care facility.
The article goes on and on like this. The problem is delays and queuing in facilities that provide free care. And the difference between this and state-run health care is what exactly? When a product or service is free, people will tend to over-consume the supply, with rationing taking place via queuing rather than price. This is how every state-run supply system works, from food in the Soviet Union to health care in Canada. And by the way, exactly how upset should I be about people receiving an extraordinarily valuable and costly service for free but having to wait a while to get it?
This article is actually a great rebuttal of the inherent message in the health care debate that “uninsured” means “denied health care.” In fact, it is clear that even in the spot USAToday picked out as the worst in the country, the uninsured are in fact getting health care. It is tedious with long waits, but there are no examples in the long article of people going without. Yes some people consume less than they might if it was free and convenient, but that is just the rationing at work. Anyone who says that rationing goes away in a state-run system is bald-faced lying to you.
Remember that national health care does not eliminate queuing and waits for the poor – it just institutionalizes these waits for the rest of us. Universal Health Care is equivalent to a Great Society housing program where everyone, rich and poor, have to give up their house and move into a crappy public apartment block.
**Postscript: **By the way, I am sympathetic to certain hospital administrators who have a “crisis” on their hands because the mass of uninsured show up in their emergency rooms. That, however, is a problem manageable far short of government-run health care. They want to blame diversions of critical patients away from over-crowded emergency rooms on the “uninsured” but it is really a function of their own faulty triage.
**Update: **Michael Moore will soon argue that its better in Cuba. Hah! That is funny. If people really want to believe this, then it is another reason is is way past time to open up our relations to Cuba, so people can see for themselves what a lying sack of poop this filmmaker is.
You’re misunderstanding.
If you have to buy individual insurance, the company has the option of declining you or charging you an outrageous premium based on your personal risk. They don’t have that option as a group.
As a result, they can’t cherrypick the group. So it’s not the same group of people.
I’m not misunderstanding the point, I just don’t think it’s all that important.
Companies are already denying coverage to certain groups, or charging higher premiums. That’s why employers are trying to get their employees to stop smoking, etc. And if we wanted to, it would be a simple enough matter to say that insurance companies can’t cherrypick customers, and thereby deny coverage to people.
This is pretty marginal stuff, though.
It appeared to me as if you were making a semantic argument with trio. I interpreted his statement as saying there should be no serious disagreement over improving health care.
I’m not arguing that nationalized health-care or private health care are the only alternatives as there is certainly a continuum with various options. But generally speaking, a nationalized system provides the easiest comparison/alternative for sake of discussion.
Most of the critics, or at least the loudest, argue against nationalized health care on the basis that it is socialism (operating, of course, on the assumption that socialism is one of the seven deadly sins) and that American health care is the best (everyone wants to come to the US for care, no one would go to Canada or Europe). Again, I am not saying “boo hoo, the nationalized health care isn’t getting its due”. I am more concerned that the debate is being framed such that the merits are not being considered. Instead, the “debates” focus on the evils of socialism, which is silly.
It’s hardly marginal.
Perhaps it would be easier if you read this Gladwell article.
It would be nice if what you were quoting is in fact accurate. It is not. Perhaps a more cogent argument would be that this rationing you mention is taken from an example where it appears that all the uninsured in a region are being funneled into one hospital. Then obviously rationing is the result.
Perhaps you should consider these facts that I’ll excerpt from the Gladwell article, that strongly suggest that the rationing argument is nothing more than hot air.
One of the great mysteries of political life in the United States is why Americans are so devoted to their health-care system. Six times in the past century—during the First World War, during the Depression, during the Truman and Johnson Administrations, in the Senate in the nineteen-seventies, and during the Clinton years—efforts have been made to introduce some kind of universal health insurance, and each time the efforts have been rejected. Instead, the United States has opted for a makeshift system of increasing complexity and dysfunction. Americans spend $5,267 per capita on health care every year, almost two and half times the industrialized world’s median of $2,193; the extra spending comes to hundreds of billions of dollars a year. What does that extra spending buy us? Americans have fewer doctors per capita than most Western countries. We go to the doctor less than people in other Western countries. We get admitted to the hospital less frequently than people in other Western countries. We are less satisfied with our health care than our counterparts in other countries. American life expectancy is lower than the Western average. Childhood-immunization rates in the United States are lower than average. Infant-mortality rates are in the nineteenth percentile of industrialized nations. Doctors here perform more high-end medical procedures, such as coronary angioplasties, than in other countries, but most of the wealthier Western countries have more CT scanners than the United States does, and Switzerland, Japan, Austria, and Finland all have more MRI machines per capita. Nor is our system more efficient. The United States spends more than a thousand dollars per capita per year—or close to four hundred billion dollars—on health-care-related paperwork and administration, whereas Canada, for example, spends only about three hundred dollars per capita. And, of course, every other country in the industrialized world insures all its citizens; despite those extra hundreds of billions of dollars we spend each year, we leave forty-five million people without any insurance. A country that displays an almost ruthless commitment to efficiency and performance in every aspect of its economy—a country that switched to Japanese cars the moment they were more reliable, and to Chinese T-shirts the moment they were five cents cheaper—has loyally stuck with a health-care system that leaves its citizenry pulling out their teeth with pliers.
He goes on to discuss moral hazard, the driving economic theory behind our current healthcare system. The theory is nice on paper, but makes no sense in reality unless you think America is essentially a country populated by hypochondriacs.
“Moral hazard” is the term economists use to describe the fact that insurance can change the behavior of the person being insured. If your office gives you and your co-workers all the free Pepsi you want—if your employer, in effect, offers universal Pepsi insurance—you’ll drink more Pepsi than you would have otherwise. If you have a no-deductible fire-insurance policy, you may be a little less diligent in clearing the brush away from your house. The savings-and-loan crisis of the nineteen-eighties was created, in large part, by the fact that the federal government insured savings deposits of up to a hundred thousand dollars, and so the newly deregulated S. & L.s made far riskier investments than they would have otherwise. Insurance can have the paradoxical effect of producing risky and wasteful behavior. Economists spend a great deal of time thinking about such moral hazard for good reason. Insurance is an attempt to make human life safer and more secure. But, if those efforts can backfire and produce riskier behavior, providing insurance becomes a much more complicated and problematic endeavor.
In 1968, the economist Mark Pauly argued that moral hazard played an enormous role in medicine, and, as John Nyman writes in his book “The Theory of the Demand for Health Insurance,” Pauly’s paper has become the “single most influential article in the health economics literature.” Nyman, an economist at the University of Minnesota, says that the fear of moral hazard lies behind the thicket of co-payments and deductibles and utilization reviews which characterizes the American health-insurance system. Fear of moral hazard, Nyman writes, also explains “the general lack of enthusiasm by U.S. health economists for the expansion of health insurance coverage (for example, national health insurance or expanded Medicare benefits) in the U.S.”
What Nyman is saying is that when your insurance company requires that you make a twenty-dollar co-payment for a visit to the doctor, or when your plan includes an annual five-hundred-dollar or thousand-dollar deductible, it’s not simply an attempt to get you to pick up a larger share of your health costs. It is an attempt to make your use of the health-care system more efficient. Making you responsible for a share of the costs, the argument runs, will reduce moral hazard: you’ll no longer grab one of those free Pepsis when you aren’t really thirsty. That’s also why Nyman says that the notion of moral hazard is behind the “lack of enthusiasm” for expansion of health insurance. If you think of insurance as producing wasteful consumption of medical services, then the fact that there are forty-five million Americans without health insurance is no longer an immediate cause for alarm. After all, it’s not as if the uninsured never go to the doctor. They spend, on average, $934 a year on medical care. A moral-hazard theorist would say that they go to the doctor when they really have to. Those of us with private insurance, by contrast, consume $2,347 worth of health care a year. If a lot of that extra $1,413 is waste, then maybe the uninsured person is the truly efficient consumer of health care.
The moral-hazard argument makes sense, however, only if we consume health care in the same way that we consume other consumer goods, and to economists like Nyman this assumption is plainly absurd. We go to the doctor grudgingly, only because we’re sick. “Moral hazard is overblown,” the Princeton economist Uwe Reinhardt says. “You always hear that the demand for health care is unlimited. This is just not true. People who are very well insured, who are very rich, do you see them check into the hospital because it’s free? Do people really like to go to the doctor? Do they check into the hospital instead of playing golf?”
For that matter, when you have to pay for your own health care, does your consumption really become more efficient? In the late nineteen-seventies, the Rand Corporation did an extensive study on the question, randomly assigning families to health plans with co-payment levels at zero per cent, twenty-five per cent, fifty per cent, or ninety-five per cent, up to six thousand dollars. As you might expect, the more that people were asked to chip in for their health care the less care they used. The problem was that they cut back equally on both frivolous care and useful care. Poor people in the high-deductible group with hypertension, for instance, didn’t do nearly as good a job of controlling their blood pressure as those in other groups, resulting in a ten-per-cent increase in the likelihood of death. As a recent Commonwealth Fund study concluded, cost sharing is “a blunt instrument.” Of course it is: how should the average consumer be expected to know beforehand what care is frivolous and what care is useful? I just went to the dermatologist to get moles checked for skin cancer. If I had had to pay a hundred per cent, or even fifty per cent, of the cost of the visit, I might not have gone. Would that have been a wise decision? I have no idea. But if one of those moles really is cancerous, that simple, inexpensive visit could save the health-care system tens of thousands of dollars (not to mention saving me a great deal of heartbreak). The focus on moral hazard suggests that the changes we make in our behavior when we have insurance are nearly always wasteful. Yet, when it comes to health care, many of the things we do only because we have insurance—like getting our moles checked, or getting our teeth cleaned regularly, or getting a mammogram or engaging in other routine preventive care—are anything but wasteful and inefficient. In fact, they are behaviors that could end up saving the health-care system a good deal of money.
Great thread, Trio, this is definitely a discussion we need to be having. Unfortunately Moore has become such a lightning rod that his entry into the discussion pretty much polarizes it from the get go. I think the New Yorker article is a much better place to start this.
Anyway, one thing I see a lot here and other places is the assumption that a national health plan means nationalized health care - as in the Govt owning all the hospitals - and I don’t think anyone is seriously proposing that. We already have a single payer system for people over 65, and I don’t see any credible argument that Medicare increases waste (proportionally to private insurance) or wait times. It does provide vastly better access to health care for the elderly.
Almost certainly any national health plan in the US would be based on the Medicare model.
I think that’s the scare tactic being used - gov’t owned hospitals, rationing, no choice, etc.
The credible proposals I’ve seen basically expand Medicare to cover everybody. Given that the expense ratio of Medicare is apparently a small fraction of that of the HMOs and satisfaction surveys far higher, I’m not really sure what people are complaining about.
The article from the New Yorker is very good. I’ve posted a lot of articles from there in the past. I think the appetite for a long, well-researched (the New Yorker’s fact checking dept. is famous), and thoughtful article is somewhat limited. People seem to be more interested in brief blogposts from somewhat dubious sources, unfortunately.
I think ultimately, as with many other political issues, is that it becomes a battle of interest groups. In this case, its a very small group of executives and the politicians they own, including, as Moore points out, Hillary Clinton, versus the greater good of the citizenry. I suspect that a lot of contemporary issues boil down to these rather asymmetric oppositions.
Moore has been spot on with all of his films. The right will again try to discredit him without ever watching the movie. They’ll call him a liar without having watched the content. I have a hard time believing the right really cares about asking the tough questions like Moore does.
Actually, I think the right is happy to ask tough questions and sponsor documentaries, as long they revolve around how Bill and Hillary allegedly killed Vince Foster and covered it up. Healthcare, not so much.
As you point out, expense ratio is the magic metric here. As with a mutual fund, the right question is “what am I paying for this level of performance”. I hear the argument bandied about that all these Govt entitlements are already breaking our back so how can we cover more people, but the answer is the expense ratio and the allocation of risk premiums. The money goes to one premium or other in any scenario. Medicare beneficiaries themselves by and large are not paying their own premiums. Take the money flowing into private insurance and put that into population-wide Medicare premiums and the calculus changes dramatically. The marginal cost of insuring the non-elderly popation is WAY less than that of insuring those over 65. The private system is reasonably efficient when times are good, because excess premiums go into investments that benefit the overall economy. But when stock prices are falling the insurance reserve requirements turn into a giant margin call and the insurance carriers never seem to learn from overexposure to equities.
A Govt health insurer has the luxury of prioritizing care over shareholder return.
A few points:
While the snippet pulled from the New Yorker is interesting, and may even be accurate, the mag is hardly the paradigm for neutral reporting or expos’e. Like most other sources, they have marked tilt.
I would contend that the “metric” of cost per individual user is massively skewed here in the states, as our prescription drug costs include much of the research and profit monies that pharmaceuticals earn. (Looks to me like Bush has repeatedly protected the interests of this industry at the expense of the taxpayer)
Medicare is struggling, and many doctors are refusing new medicare patients as the govt. has not approved increases in payment levels for too long…at least that’s what two doctors who recently refused to take on my dad a s a new patient told us.
I don’t deny that the New Yorker can be called liberal. I think that however, as a publication, it does not have an open political raison d’etre like say, the National Review, and that its thoroughness in fact checking and integrity is simply legendary. I think if you want to understand our current situation a little better, the few minutes to read the article would serve you well. Or you could just read the blogs. It’s up to you.
In terms of the pharma companies, they clearly charge more here because they can. Between the drug bill and a seeming bias by managed care towards pharma solutions, its simple economics that they can charge more here than they can elsewhere. Its very much the reason they don’t want to allow the importation of drugs - it wrecks their very careful segmentation of markets necessary to maximize profits.
As for Medicare struggling, I think that’s debatable. It may be slow to increase reimbursements, and in general doesn’t pay as much as private without question, but the program seems to function fairly well for its constituents, who aren’t the doctors.
I don’t deny that the New Yorker can be called liberal. I think that however, as a publication, it does not have an open political raison d’etre like say, the National Review, and that its thoroughness in fact checking and integrity is simply legendary. I think if you want to understand our current situation a little better, the few minutes to read the article would serve you well. Or you could just read the blogs. It’s up to you.
LOL, nice that you think a blogger’s comments relative to a recent article encompass my knowledge of the healthcare problem/debate. I read the article you linked when you first posted the link, and it is one viewpoint…one that you apparently agree with. Bottom line is an author can make the “facts” lead to whatever conclusion they choose to, or more accurately, support the conclusion they’ve already come to, and both sides do.
When I look at the health care issue, regardless of what system is in place it results in those that are able/willing to pay taxes and buy insurance pay for those that can’t/won’t.
I don’t blindy oppose a national health care system … but I do admit to getting tired of seeing examples of people with a job (some making 50K and up) that are uninsured. What you have in those cases are people choosing to spend their money elsewhere (like fun stuff, and living above their means) and then something bad happening to them, and now they’re overwhelmed with health care costs. Seems to me they gambled with their money and lost.
On the other side of the coin … I work with a lot of lower income kids and families, and they all seem to have a state number (MediCare) that goes along with free lunches/breakfast, and the kids I see and meet with go to psychologists, psychiatrists, multiple medications, etc … and the gov’t/state takes care of it. (My hang-up with this is that a growing percentage of the state budget goes to “Health and Human Services”, which means less percentage for education. With yearly increasing national standards, and without nationally funded programs to attain those standards, “doing more with less” is getting old. 'Nother topic, likely.]
If anyone has a breakdown of income, citizenship status, etc of the “uninsured” (rather than just a number that may or may not be accurate or may or may not tell the story), I would be interested in seeing “who” the uninsured are. I would venture that many are working adults that work at a place that does not provide insurance and they choose not purchase personal insurance in favor of buying other things. I concede that some of them realistically cannot afford insurance and I would like to see something done about that situation.