The second in the list of top ten reasons universal coverage is bad is…
People don’t have insurance because they choose to not buy it.
Admittedly there are several closely related arguments, but we’ll stick with the letter of the argument in this post, and address the relations later.
I will stipulate to some people choosing to not buy insurance, with the caveat that ‘some’ is a really small number. In fact, that ‘really small number’ is 2%. Yes, only 2% of those without insurance say they have no need for insurance.
So, at a simplistic level, the ‘choice’ argument goes down in flames. Alas, my more demanding readers will want more.
Put simply, consumers have to decide how to allocate limited financial resources among shelter, food, transportation, clothing, education/child care, recreation, health care. For many, the decision is made for them – health insurance is simply unaffordable.
Financially, here’s how the numbers work. The median income in California for a single person (we’ll call Median Man) is about $30k; individual insurance premiums would eat up up 16% of that $30k (and remember that’s 16% of the gross, not net after-tax income). But this insurance would protect MM from the cost of health care, no? It is, after all, ‘insurance’…
Bad news for our Man. Individual policies often have many limitations and exclusions, along with (for those in MM’s income category) stratospheric deductibles. So an individual policy would not really protect the man from high medical bills. Again, the numbers; 18.8 million people spent more than 20% of their income on out-of-pocket health care costs in 2003. 48.8 million spent more than 10%. Logically, it is hard to make a case that folks would choose to spend this high a percentage of their income on health care, especially after they had paid big bucks for an insurance policy. And the MMs of the world are logical; less than 7% buy insurance through the individual market (RWJ study again).
But they would buy it through their employer. Most of the non-elderly who have insurance get it through their employer (63% of non-elderly insured to be exact; see the RWJ study linked above). Unfortunately for our Man, it is increasingly unlikely his employer will continue to offer health insurance. Half of employers with 3-9 employees offered health insurance in 2006 (RWJ study again); and when employers do offer health insurance, the overwhelming reason workers decline the coverage is cost – they can’t afford it.
It’s no surprise that 80% of the uninsured were in families with at least one full-time worker.
The net?
Essentially everyone without insurance would ‘buy’ it if they could afford to. It’s not a matter of choice, but affordability.
Myth busted.
And when “Median Man” gets his free health care without those pesky limitations, exclusions and deductibles that now have “Median Man” consider the financial impact care he requests, what is the unintended consequence?
An increase in the demand for care and an increase in costs. (the interplay of supply and demand?)
Just like Medicare delivered us in the late 60’s through early 80’s.
The best way to increase the cost of medicine?
Make it free!
Interesting..I do not ever remember any logical proposal (and certainly nothing Joe has discussed)for Universial Coverage being FREE. However, there seems to be a segment of Americans who see “affordable” as being the same thing as free.
Aubrey–
Actually, the majority of healthcare spending is done by those with chronic illnesses, which can be prevented or treated at a fraction of the cost if caught early. That is, if “Median Man” has access to medicine early, he won’t need as much of it later. As many have noted, we already pay for the emergency care of “Median Man”; why not channel this money into improving both the health and quality of life of citizens? The benefits of preventative medicine won’t become apparent immediately, but I think it would be a positive shift in healthcare spending.
Dear ERM: Ah yes, the rational American consumer of healthcare. This is why no Americans overeat, because they know it will lead to diabetes. No Americans fail to treat hypertension because they know it will lead to heart disease. No Americans eat red meat because they know it will lead to heart disease. No, no Americans care about healthcare until AFTER they have a problem.
Better to give people with chronic illnesses a chance to manage their illness rather than not giving them any first dollar coverage and paying for emergency room visits and expensive life-saving procedures.
Like that study Joe wrote about earlier this week… increasing copayments on drugs used by the chronically ill actually increased costs because they forewent essential drug treatments to save money and harmed themselves. Imagine how much more expensive it is (both in expensive medical procedures and lost productivity) to provide NO treatment to the chronically ill? Capitalists should love universal health care because it keeps all the poor worker bees healthy and drives national productivity.
Brent, I’m not sure that I understand your argument. I myself am rather cynical when it comes to the behavior of human beings. I don’t think that giving people access to regular check-ups will automatically solve the problem of obesity, and I realize that getting people to change their lifestyles is a hugely complex issue.
You seem to imply that the only function of preventative medicine is to get people to lose weight and stop eating red meat. This is simply not the case. Preventative medicine can run the gamut from regular testing of diseases for at-risk patients (so as to catch diseases early) to disease-management programs to portable computers that remind patients to take their meds at regular intervals.
Let’s take diabetes, the most prevalent of chronic illnesses, as an example. There is overhwelming evidence that disease management programs and early diagnoses drastically reduce the healthcare costs of patients with diabetes. A study done in 2002 found that simply enrolling diabetes patients in a disease management program resulted in an average monthly healthcare savings of $107.86. 1/3 of persons with Type 2 diabetes are currently undiagnosed. As diabetes leads to a wealth of other problems, ranging from renal disease to blindness to heart disease (and beyond!), catching it early and helping citizens to manage it would likely result in huge savings over time (see “Saving Lives & Saving Money” by Newt Gingrich, pages 135-162 for more information on this, particularly p. 143 for the statistics that I reference).
I don’t mean to harp on this or digress from the original post, but preventative medicine is a popular bipartisan reform issue and I think it’s important that you understand the reasoning behind my point of view before disagreeing with it. I am, of course, happy to hear differeing opinions and the evidence used to substantiate these opinions.
Thank you for a thoughtful dialogue.
I do not feel cynical about human behavior; simply realistic and experienced. Studies of disease mgmt remain questionable; however, I am a fan of the idea. I believe the most conclusively proven theorem of all is that socialism destroys individual responsibility and demotivates people. All countries in which socialism has become the form of government have declined. Healthcare is no different from housing, food or entertainment: it is a personal choice and a personal cost. The only way to pay for care for the “poor” is to tax the “rich”. “Atlas Shrugged” is already the predominant issue facing the US today and adding healthcare to the already huge and ponderous government will push us irrevocably into socialism, if we are not already hopelessly there already. My earlier observations regarding SOX are related in that the government has found that they don’t have to push for government ownership of business. If the government regulates all that a company can do, and taxes it to pull out the necessary profits, we have accomplished the equivalent of government ownership. And what has been the consequences of government control of public companies? An explosion of private equity, the US market performance is now a small fraction of the int’l equity performance, offshore IPO’s and the retirement of over half of the prior period’s CEO’s. Even without Universal Healthcare, the socialism boat has probably already sailed in what is now the sunsetting of our former “land of the free”.