Map of life expectancy at birth from Global Education Project.

Monday, November 09, 2009

lecture notes

I'm trying to put together a talk for next Monday evening in Connecticut about a subject that would actually be simple but is complicated only because there are some seriously false assumptions deeply embedded in our political culture. The outline is something like this:

1. All the stuff you already know about how we spend more on health care than anybody else, but have the worst health and life expectancy of any developed country (and worse than some fairly poor ones), the least satisfaction, highest out of pocket costs, most trouble getting an appointment, and alone among wealthy countries, leave 15% of the population with no coverage at all.

2. The discussion of this problem is seriously warped because people believe in the fictitious economic theory they are taught in college. None of the assumptions underlying the theory of the Glorious Free Market are true, there is no such thing as a Free Market and never will be, but in health care it's even more obvious.

2.1 BTW, health care is a mixed good -- it has (or at least can have) positive externalities that are at least as valuable as the benefits to the recipient. We spend too much, yet at the same time, we manage to underproduce.

3. Paradox is explained in large part by provider-induced demand combined with pernicious effects of the insurance market . . .

4. Competition among insurance companies is bad. It does not produce efficiency or choice or consumer sovereignty, but rather medical underwriting (charging more or not offering insurance at all to people of high risk, no coverage for "pre-existing" conditions, and rescission); annual and life-time caps on benefits; limited benefits (e.g. no dental and no mental); and high co-pays and deductibles intended to discourage utilization.

5. Even the bogus economic theory does not predict just outcomes, but health, and the need for health care, are obviously determined unjustly. Nevertheless, we all grow older and will need more as time goes on. That's one purpose of insurance -- to spread risk and cost and help fix the injustice of the universe.

6. That requires getting everybody into the same pool. Yes, young healthy people will have to pay more than they may be paying now, but they all hope to be older and less healthy some day. It also requires that everybody be required to participate (or those young healthy folks won't), and that low income people get subsidies. But this cannot happen without government intervention.

7. Controlling costs and achieving high quality, however, requires more than universal coverage and community rating -- it requires a radical reorganization of the health care institution and how we pay for health care. That's not in the bill, and it means big trouble down the road if we don't start working on it now.

8. There is no conflict here between justice and liberty, because if I exercise my liberty not to participate today, and only choose to participate when it suits me (presumably because I'm now older and/or sicker), it will cost everybody else money and reduce their liberty. We are only free when we have a modicum of justice.

Now, I have to open up all those points and prove them and knit them together. And I have to be entertaining in the process. We'll see what happens.


Anonymous said...

If insurance cos. are COMPETING FOR PROFITS, the winners will screw (will have screwed) over patients / insurees.

Or they will have been lucky (not rewardable, really); or they will have used marketing techniques / patient management techniques to lower their outlay as compared to others. (Here one insurance co. wanted to offer free cell phones to young ppl for joining; Another wanted to pay for homeopathic medecine, for cancer patients and so on...) So, In Switz. the Gvmt has to control them, practically preventing them from making any profit, or forcing them, if they do, to keep reserves for bad years or bail out their competitors *yikes!* who fared less well. So to stop health care going down the drain the insurers in effect are so controlled they are an ‘arm’ of the Gvmt.

The result is that competition between insurers is ersatz. Only about 7% of ppl per year in CH change insurance, and they do so not because they ‘get a better deal’, but because for ex. they marry and prefer to have one insurer where they previously had two, or four for a recomposed family; and mostly, because they move, and there are 3 linguistic regions, differing local habits / procedures, premiums vary by region, etc.

Cervantes said...

Right Anna. Put them in a regulatory straitjacket so they have to give community rating and a common minimum benefits package. Of course once you do that there's no real reason for them to exist, but that's a political problem.